What changed in this filing

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Item 1A. Risk Factors

2024-02-16 compared with 2023-02-15 · 124 added, 100 removed, 237 unchanged (49% of the section changed)

11 unchanged sentences

If the investment performance of our managed investment portfolios is less than that of our competitors or applicable third-party benchmarks, we could lose existing and potential clients and suffer a decrease in assets under management.

Poor performance relative to other competing products tends to result in decreased sales and increased redemptions with corresponding decreases in our revenues.

• General Financial Market Declines.

5 unchanged sentences

Our investors generally may withdraw their funds at any time, without advance notice and with little to no significant penalty.

Any redemptions and other withdrawals from, or shifting among, our investment portfolios could reduce our assets under management.

These could be caused by investors reducing their investments in our portfolios in general or in the market segments in which we focus;

investors taking profits from their investments;

and portfolio risk characteristics, which could cause investors to move assets to other investment managers .

• Capacity Constraints.

5 unchanged sentences

• Geo-Political Exposure.

A decrease in the value of assets under our management, or an adverse change in their composition, particularly in market segments where our assets are concentrated, could have a material adverse effect on our investment advisory fees and revenues.

Our managed investment portfolios may have significant investments in markets that are subject to risk of loss from political or diplomatic developments, government policies, wars, conflicts or civil unrest (such as the Russian invasion of Ukraine, the threat that Russia’s military aggression may expand beyond Ukraine, and the recent conflicts in the Middle East), trade wars or tariffs, currency fluctuations, illiquidity and capital controls, and changes in legislation related to ownership limitations.

A decrease in the value of our assets under management, or an adverse change in their composition, particularly in market segments where our assets are concentrated, could have a material adverse effect on our investment advisory fees and revenues.

For any period in which revenues decline, net income and operating margins will likely decline by a greater proportion because certain expenses will be fixed over that finite period and may not decrease in proportion to the decrease in revenues.

15 unchanged sentences

Substantially all of our investment products are available without sales or redemption fees, which means that investors may be more willing to transfer assets to competing products.

If our clients reduce their investments with us, and we are not able to attract new clients, our AUM, revenue and earnings could decline.

The market environment in recent years has led investors to increasingly favor lower fee passive investment products.

1 unchanged sentence

While we believe there will always be demand for strong performing active management, we cannot predict how much market share these competitors will gain.

Furthermore, many aspects of the asset management industry are seeing increased regulatory activity and scrutiny, in particular related to ESG practices and related matters, transparency and unbundling of fees, inducements, conflicts of interest, risk management, cybersecurity, technology, diversity, equity and inclusion, and compensation.

Furthermore, many aspects of the asset management industry are seeing increased regulatory activity and scrutiny, in particular related to environmental, social, and governance ("ESG") practices and related matters, transparency and unbundling of fees, inducements, conflicts of interest, risk management, cybersecurity, technology, privacy and data protection, diversity, equity and inclusion, and compensation.

We may respond to these regulatory matters or may be impacted by these actions in a manner different from our competitors, which may impact our AUM or result in the loss of clients and their assets.

12 unchanged sentences

Business changes may require us to update our processes or technology and may increase risk to meeting our business objectives.

In addition, our information systems and technology platforms might not be able to accommodate our business operations, and the cost of maintaining such systems might increase from its current level.

If any of these factors were to arise it could disrupt our operations, increase our expenses or result in financial exposure, regulatory inquiry or reputational damage.

Our business model is dependent on our personnel, who as part of their roles support internal controls, supervision, technology and training to provide comfort that our activities do not violate applicable guidelines, rules and regulations or adversely affect our clients, counterparties or us.

In addition, our existing information systems and technology platforms might not be able to accommodate our

business operations, and the cost of maintaining or upgrading such systems might increase from its current level.

If any of these scenarios were to arise, it could disrupt our operations, increase our expenses or result in financial exposure, regulatory inquiry, litigation or reputational damage.

Our business model is dependent on our personnel, who as part of their roles support disclosure and internal controls, compliance, supervision, technology and training to provide comfort that our activities do not violate applicable guidelines, rules and regulations or adversely affect our clients, counterparties or us.

We also rely on the personnel of others involved in our business, such as third-party service providers, intermediaries or other vendors.

Our personnel and the personnel of others involved in our business may make errors or engage in fraudulent or malicious activities, that are not always immediately detected, which may disrupt our operations, cause losses, lead to regulatory fines or sanctions, litigation, or otherwise damage our reputation.

Our personnel and the personnel of others involved in our business may make errors or engage in fraudulent or malicious activities, that are not always immediately detected or that cannot be easily remediated, which may disrupt our operations, cause losses, lead to regulatory fines or sanctions, litigation, or otherwise damage our reputation.

The quantitative models we use may contain errors, which could result in financial losses or adversely impact product performance and client relationships.

5 unchanged sentences

Regulatory inquiries and rumors can tarnish or substantially damage our reputation, even if those inquiries are satisfactorily addressed.

Actual or perceived failure to adequately address the environmental, social, and governance ("ESG") expectations, or failure to manage conflicts of interests, of our various stakeholders could lead to a tarnished reputation and loss of client assets or harm our access to capital.

Actual or perceived failure to adequately address the ESG expectations, or failure to manage conflicts of interests of our various stakeholders could lead to a tarnished reputation and loss of client assets or harm our access to capital.

Furthermore, ESG issues have been the subject of increased focus by regulators and stakeholders.

6 unchanged sentences

Real or perceived conflicts between our clients’ interests and our own, as well as any fraudulent activity or other exposure of client assets or information, may impair our reputation and subject us to litigation or regulatory action.

Any damage to our brand

could impede our ability to attract and retain clients and key personnel, and reduce the amount of assets under our management, any of which could have a material adverse effect on our revenues and net income.

Any damage to our brand could impede our ability to attract and retain clients and key personnel, and reduce the amount of assets under our management, any of which could have a material adverse effect on our revenues and net income.

Failure to comply with client contractual requirements and/or investment guidelines could result in costs of correction, damage awards or regulatory fines and penalties against us and loss of revenues due to client terminations.

1 unchanged sentence

Laws and regulations impose similar requirements for certain investment products.

A failure to comply with these guidelines or requirements could result in damage to our reputation or in our clients seeking to recover losses, withdrawing their assets or terminating their contracts.

While we maintain various compliance procedures and other controls to seek to prevent, detect and correct such errors, any failure to comply with these guidelines or requirements could result in damage to our reputation or in our clients seeking to recover losses, withdrawing their assets or terminating their contracts.

Regulators likewise may commence enforcement actions for violations of such requirements, which could lead to fines and penalties against us.

Any such effects could cause our revenues and profitability to decline.

We maintain various compliance procedures and other controls to seek to prevent, detect and correct such errors.

Significant errors for which we are responsible could impact our reputation, results of operations, financial condition or liquidity.

Any such events could cause our revenues and profitability to decline, and significant errors for which we are

responsible could have a material adverse impact on our reputation, results of operations, financial condition or liquidity.

Our expenses are subject to significant fluctuations that could materially decrease net income.

1 unchanged sentence

• expenses incurred in connection with our multi-year strategic plan to strengthen our long-term competitive position;

• variations in the level of total compensation expense due to changes in, among other things, bonuses, stock-based awards, employee benefit costs due to regulatory or plan design changes, our employee count and mix, competitive factors, market performance, and inflation;

• variations in the level of total compensation expense due to changes in, among other things, bonuses, stock-based awards, employee benefit costs due to regulatory or plan design changes, labor market conditions, our employee count and mix, competitive factors, market performance, and inflation;

• changes in the level of our advertising and promotion expenses, including the costs of expanding investment advisory services to investors outside of the U.S.

2 unchanged sentences

• expenses and capital costs incurred to maintain and enhance our administrative and operating services infrastructure, such as technology assets, depreciation, amortization, and research and development;

• changes in the costs incurred for third-party service providers that perform certain administrative and operating services;

• changes in the costs incurred for third-party service providers that perform certain administrative and operating services, including as a result of changes in market conditions, labor costs and inflation;

• changes in expenses that are correlated to our assets under management, such as distribution and servicing fees;

4 unchanged sentences

• future changes to legal and regulatory requirements and potential litigation;

• disruptions of third-party services such as communications, power, cloud services, transfer agent, investment management, trading, and accounting systems.

• disruptions of infrastructure and third-party services such as communications, power, cloud services, transfer agent, investment management, trading, and accounting systems.

Under our agreements with the U.S.

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In the event that our hedging strategies are not effective, the resulting impact may adversely affect our results of operations, cash flows or financial condition.

Amendments to tax laws may impact the marketability of the products and services we offer our clients or our financial position.

We are subject to income taxes as well as non-income-based taxes, in both the United States and various foreign jurisdictions.

We cannot predict future changes in the tax regulations to which we are subject, and these regulations could have a material impact on our tax liability or result in increased costs of our tax compliance efforts.

Additionally, changes in the status of tax deferred investment options, including retirement plans, tax-free municipal bonds, the capital gains and corporate dividend tax rates, and other individual and corporate tax rates could cause investors to view certain investment products less favorably and reduce investor demand for products and services we offer, which could have an adverse effect on our assets under management and revenues.

Examinations and audits by tax authorities could result in additional tax payments for prior periods.

Changes in tax laws or exposure to additional tax liabilities may impact our financial position or the marketability of the products and services we offer our clients.

We are subject to income taxes as well as non-income-based taxes and complex tax regimes in both the United States and various foreign jurisdictions in which we operate.

We cannot predict future changes in the tax regulations to which we are subject, and any such changes could have a material impact on our tax liability or result in increased costs of our tax compliance efforts.

investors to view certain investment products less favorably and reduce investor demand for products and services we offer, which could have an adverse effect on our assets under management and revenues.

Examinations and audits by tax authorities could result in additional tax payments for prior periods, which could impact our financial results.

Based on the global nature of our business, from time to time we are subject to tax audits in various jurisdictions.

1 unchanged sentence

Tax authorities may disagree with certain positions we have taken and assess additional taxes (and, in certain cases, interest, fines, or penalties).

We have a process to evaluate whether to record tax liabilities for anticipated tax audit issues based on our estimate of whether, and the extent to which, additional income taxes will be due.

We adjust these liabilities in light of changing facts and circumstances.

Due to the complexity of some of these uncertainties, however, the ultimate resolution may result in a payment that is materially different from our estimates.

We have a process to evaluate whether to record tax liabilities for anticipated tax audit issues based on our estimate of whether, and the extent to which, additional income taxes will be due, and adjust these liabilities in light of changing facts and circumstances.

Due to the complexity of some of these uncertainties, however, the ultimate resolution may result in a payment that is materially different from our estimates and impact our financial results.

We have contracted with third-party financial intermediaries that distribute our investment products and such relationships may not be available or profitable to us in the future.

These contracted third-party intermediaries generally offer their clients various investment products in addition to, and in competition with, our investment products, and have no contractual obligation to encourage investment in our products.

Third-party financial intermediaries we contract with generally offer their clients various investment products in addition to, and in competition with, our investment products, and have no contractual obligation to encourage investment in our products.

It would be difficult for us to acquire or retain the management of those assets without the assistance of the intermediaries, and we cannot assure that we will be able to maintain an adequate number of investment product offerings and successful distribution relationships.

In addition, some investors rely on third-party financial planners, registered investment advisers, and other consultants or financial professionals to advise them on the choice of an investment adviser and investment products.

These professionals and consultants can favor a competing investment product as better meeting their particular clients' needs.

These professionals and consultants may favor a competing investment product for reasons we cannot control.

We cannot assure that our investment products will be among their recommended choices in the future.

5 unchanged sentences

Any inability to access and successfully sell our products to clients through such third-party channels could have a negative effect on our level of AUM and adversely impact our business.

Moreover, we can provide no assurance that we will continue to have access to the third-party financial intermediaries that currently distribute our products, or that we will continue to have the opportunity to offer all or some of our existing products through them.

Moreover, we can provide no assurance that we will continue to have access to the third-party financial intermediaries that currently distribute our products on favorable terms or at all, or that we will continue to have the opportunity to offer all or some of our existing products through them.

The presence of any of the adverse conditions discussed above would reduce revenues and net income, possibly by material amounts.

Natural disasters and other unpredictable events could adversely affect our operations.

Armed conflicts, trade wars, tariffs or sanctions, terrorist attacks, cyberattacks, power failures, epidemics or pandemics, climate change, increased severity of weather events, or natural disasters and other events outside of our control could adversely affect our revenues, expenses, and net income by:

Natural disasters and other unpredictable events could adversely affect our operations and financial results.

The occurrence of extreme events, such as armed conflicts, terrorist attacks, epidemic, pandemic or disease outbreaks (such as the Covid-19 pandemic), infrastructure failures, natural disasters or extreme weather events (which may increase in intensity or frequency as a result of climate change), and other events outside of our control could adversely affect our revenues, expenses, and net income by:

• decreasing investment valuations in, and returns on, the investment portfolios that we manage;

2 unchanged sentences

• interrupting our business operations or those of critical service providers or other providers;

• affecting the availability of infrastructure upon which our operations depend, such as road networks and electrical power grids;

• triggering technology delays or failures;

2 unchanged sentences

Colorado Springs, Colorado;

Forth Worth, Texas;

New York City, New York;

and in London, England.

1 unchanged sentence

Tokyo, Japan;

and Luxembourg.

and Luxembourg, some of which are in areas that are particularly vulnerable to extreme events.

We have developed various backup systems and contingency plans, but we cannot be assured that those preparations will be adequate in all circumstances that could arise, or that material interruptions and disruptions will not occur.

We also rely to varying degrees on outside service providers for service delivery in addition to technology and disaster contingency support, and we cannot be assured that these service providers will be able to perform in an adequate and timely manner.

If we lose the availability of any associates, or, if we are unable to respond adequately to such an event in a timely manner, we may be unable to timely resume our business operations, which could lead to financial losses, a tarnished reputation and loss of clients that could result in a decrease in assets under management, lower revenues, and materially reduced net income.

If we lose the availability of any associates, or, if we are unable to respond adequately to such an event in a timely manner, we may be unable to service our clients or timely resume our business operations, which could lead to financial losses, a tarnished reputation and loss of clients that could result in a decrease in assets under management, lower revenues, and materially reduced net income, particularly if our responses to such events are less adequate than those of our competitors.

Our business, financial condition, and results of operation may be adversely affected by the coronavirus or other global pandemics.

Over the last several years, the global financial markets have been monitoring and reacting to the novel coronavirus pandemic.

Global pandemics create significant volatility, uncertainty and economic disruption to the global economy and may further impact our business, financial condition and results of operations.

The coronavirus pandemic has adversely affected global financial markets and impacted global supply chains.

Health concerns and uncertainty regarding continued coronavirus impacts could lead to further and/or increased volatility in global capital and credit markets, adversely affect our key executives and other personnel, clients, investors, service providers and other vendors, suppliers, lessees, and other third parties, and negatively impact our assets under management ("AUM"), revenues, income, business and operations.

Since our revenue is based on the market value and composition of the assets under our management, the ultimate impact on global financial markets and our clients’ decisions related to this event could adversely affect our revenue and operating results.

Pandemics, epidemics or disease outbreaks, as well as measures enacted to prevent their spread, may create significant volatility, uncertainty and disruption to the global economy and may impact our business, financial condition and results of operations.

For example, the coronavirus pandemic has adversely affected global financial markets and impacted global supply chains.

Concerns and uncertainty regarding pandemics, epidemics or disease outbreaks could lead to increased volatility in global capital and credit markets, adversely affect our operations, key executives and other personnel, clients, investors, service providers and other vendors, suppliers, and other third parties, and negatively impact our assets under management, revenues, income, business and operations.

Since our revenue is based on the market value and composition of the assets under our management, the impact of such events on global financial markets and our clients’ investment decisions could adversely affect our revenue and operating results.

Furthermore, while we have in place robust and well-established plans for operational resiliency and business continuity that address the potential impact to our associates and our facilities, and a comprehensive suite of technologies which enable our associates to work remotely and conduct business, and to date while we have been successful in navigating these challenges, no assurance can be given that the steps we have taken will continue to be effective or appropriate.

3 unchanged sentences

Separately from the investments we manage for our clients, we currently have a substantial investment portfolio

in a variety of asset classes including equities, fixed income products, multi-asset products, financial instruments, real estate and alternative investments.

Investments in these products are generally made to establish a track record, meet purchase size requirements for trading blocks or demonstrate economic alignment with other investors in our funds.

All of these investments are subject to investment market risk, and our non-operating investment income could be adversely affected by the realization of losses upon the disposition of our investments or the recognition of significant impairments or unrealized losses on these investments.

1 unchanged sentence

Fluctuations in other investment income are expected to occur in the future.

Redemptions and other withdrawals from, or shifting among, client portfolios also reduce our investment income.

These changes could be caused by investors reducing their investments in client portfolios in general or in the market segments in which we focus;

investors taking profits from their investments;

and portfolio risk

characteristics, which could cause investors to move assets to other investment managers.

Poor performance relative to other competing products tends to result in decreased sales and increased redemptions with corresponding decreases in our revenues, which may have a material adverse effect on us.

The soundness of other financial services institutions could adversely affect us or the client portfolios we manage.

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Many of these transactions expose us or such client portfolios to credit risk in the event of default of its counterparty.

While we regularly conduct assessments of such risk posed by counterparties, the risk of non-performance by such parties is subject to sudden swings in the financial and credit markets.

While we regularly conduct assessments of counterparty risks, the risk of non-performance by such parties is subject to sudden swings in the financial and credit markets.

Such non-performance could produce a financial loss for us or the portfolios we manage.

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adverse effects on our earnings in the event acquired intangible assets or goodwill become impaired;

distracting management and other key personnel from our existing businesses;

and the existence of liabilities or contingencies not disclosed to or otherwise known by us prior to closing a transaction.

9 unchanged sentences

Climate-related physical risks arise from the direct impacts of a changing climate in the short- and long-term.

Such risks may include the risks of extreme weather events and changes in temperature, which may damage infrastructure and facilities, as well as disrupt connectivity or supply chains.

Climate-related transition risks arise from exposure to the transition to a lower-carbon economy through policy, regulatory, technology and market

Such risks may include an increase in the intensity and frequency of extreme weather events, changes in temperature and rising sea level, which may damage infrastructure and facilities, increase our energy costs, negatively impact our workforce, as well as disrupt connectivity or supply chains.

Climate-related transition risks arise from exposure to the transition to a lower-carbon economy through policy, regulatory, technology and market changes.

For instance, new regulations or guidance relating to climate change, as well as the perspectives of stakeholders regarding climate change, may impact our business and reputation, which could increase costs on our business.

Climate-related physical and transition risks could impact us both directly and indirectly through adverse impacts to our clients, including as a result of declines in asset values, changes in client preferences, increased regulatory and compliance costs and significant business disruptions.

Any of these risks may cause our AUM, revenue and earnings to decline.

Climate-related physical and transition risks could impact us both directly and indirectly through adverse impacts to our clients and the global economy in general, including as a result of interruptions to infrastructure and our operations, declines in asset values and stranded assets, changes in client preferences, increased regulatory and compliance costs and significant business disruptions.

Any of these risks may have a material adverse effect on our AUM, revenue and earnings.

We are exposed to risks arising from our international operations.

8 unchanged sentences

• significant adverse changes in international legal and regulatory environments.

Our financial condition and liquidity would be adversely affected by losses on our seed capital and co-investments.

We have capital held in investment products we manage in a variety of asset classes, including equities, fixed income products, multi-asset products, financial instruments, real estate and alternative investments.

Investments in these products are generally made to establish a track record, meet purchase size requirements for trading blocks or demonstrate economic alignment with other investors in our funds.

Adverse market conditions may result in the need to write down the value of these seed capital and co-investments, which may adversely affect our results of operations or liquidity.

HUMAN CAPITAL RISKS.

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Recently we have adopted more significant notification requirements for certain key positions.

As a result of these new requirements, some employees may be less willing to continue their employment with us or join our firm.

As a result of these new requirements, some employees or candidates may be less willing to continue their employment with us or join our firm.

We cannot assure that we will be able to attract or retain key personnel.

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However, in order to retain or replace our key personnel, we may be required to increase compensation, which would decrease net income.

The loss of key personnel could damage our reputation and make it more difficult to attract and retain employees and investors.

Losses of assets from our client investors would decrease our revenues and net income, possibly materially.

The loss of key personnel could also damage our reputation and make it more difficult to attract and retain employees and investors, and in turn cause our assets under management to decrease, which could have a material adverse effect on our revenues and net income.

LEGAL AND REGULATORY RISKS.

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Our business is subject to extensive and complex, overlapping and/or conflicting, and frequently changing rules, regulations, policies and legal interpretations, around the world.

Additionally, over the past several years the pace and scope of new rules, regulations, policies and legal interpretations has increased both in the U.S.

and globally, which requires additional resources and expense in order to digest and institute process to comply.

If we are unable to maintain compliance with applicable laws and regulations, we could be subject to criminal and civil liability, the

suspension of our employees, fines, penalties, sanctions, injunctive relief, exclusion from certain markets, or temporary or permanent loss of licenses or registrations necessary to conduct our business.

A regulatory proceeding, even if it does not result in a finding of wrongdoing or sanctions, could consume substantial expenditures of time and capital.

Any regulatory investigation and any failure to maintain compliance with applicable laws and regulations could severely damage our reputation, adversely affect our ability to conduct business and decrease revenue and net income, and potentially result in complex litigation.

Additionally, over the past several years the pace

and scope of new rules, regulations, policies and legal interpretations has increased both in the U.S.

and globally, which requires additional resources and expense in order for us to digest and institute process to comply.

If we are unable to maintain compliance with applicable laws and regulations, we could be subject to criminal and civil liability, the suspension of our employees, fines, penalties, sanctions, injunctive relief, exclusion from certain markets, or temporary or permanent loss of licenses or registrations necessary to conduct our business.

A regulatory proceeding, even if it does not result in a finding of wrongdoing or sanctions, could consume substantial amount of time, management attention and expense.

Legal and regulatory developments in the mutual fund, retirement and investment advisory industry could increase our regulatory burden, impose significant financial and strategic costs on our business, and cause a loss of, or impact the servicing of, our clients and fund shareholders.

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regulators and prospective litigants may not agree with reasoned interpretations we adopt.

Future changes could require us to modify or curtail our investment offerings and business operations or impact our expenses and profitability.

Future changes could require us to modify or curtail our investment offerings and business operations which may impact our expenses and profitability.

Additionally, some laws and regulations may not directly apply to our business but may impact the capital markets, service providers or have other indirect effects on our ability to provide services to our clients.

Potential impacts of current or proposed legal or regulatory requirements include, without limitation, the following:

• As part of the debate in Washington, D.C.

and in state legislatures, there has been increasing focus on the framework of the U.S.

retirement system.

• There has been increasing focus on the framework of the U.S.

retirement system at the federal and state levels.

We could experience adverse business impacts if legislative and regulatory changes limit retirement plans to certain products and services, or favor certain investment vehicles, that we do not offer, materially limit retirement savings opportunities or foster substantial outflows from retirement savings plans for non-retirement purposes.

• There has been substantial regulatory and legislative activity at federal and state levels regarding standards of care for financial services firms, related to both retirement and taxable accounts and the United States Department of Labor intends to propose new fiduciary rules applicable to retirement plans and accounts that comprise a majority of our accounts.

Actions taken by applicable regulatory or legislative bodies may impact our business activities and increase our costs.

In October 2023, the U.S.

Department of Labor proposed a new rule updating the definition of an investment advice fiduciary under ERISA (“Retirement Security Rule”), which would apply to retirement plans and accounts that comprise a majority of our accounts.

We are monitoring the rulemaki ng process and the potential impact the Retirement Security Rule may have on our business.

• The Commodity Futures Trading Commission ("CFTC") regulation may limit the ability of certain sponsored investment products to use futures, swaps, and other derivatives.

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Nonetheless, there are still certain limitations on our investment products due to CFTC rules.

• There has been increased global regulatory focus on the manner in which intermediaries are paid for distribution of mutual funds or other collective investments funds.

• There has been increased global regulatory focus on the manner in which interm ediaries are paid for distribution of mutual funds or other collective investments funds.

Changes to long-standing market practices related to fees or enhanced disclosure requirements may negatively impact sales of mutual funds or other collective investments funds by intermediaries, especially if such requirements are not applied to other investment products.

• We remain subject to various state, federal and international laws and regulations (and associated judicial decisions) related to data collection and use;

privacy and data protection;

• We remain subject to various state, federal and international laws and regulations (and associated judicial decisions) related to privacy, data collection and use, including the EU’s GDPR and the CCPA;

cybersecurity;

current and emerging technology;

data storage, localization, retention and destruction;

data disclosure, transfer, availability, and integrity;

notification of regulators and/or impacted parties regarding adverse data-related events;

current and emerging technology, including generative AI technology;

storage, localization, retention and destruction of data;

disclosure, transfer, availability, security and integrity of data;

notification of regulators and/or impacted parties regarding adverse data-related events, including the SEC’s cybersecurity disclosure rules;

and other similar matters that can concern the data of our clients and employees.

Requirements in these areas continue to expand and evolve throughout the globe, most commonly in ways that increase the complexity and costs of compliance.

For example, in addition to the EU's GDPR data protection rules, we also are or may become subject to or affected by additional country, federal and state laws, regulations and guidance impacting consumer privacy, such as the California Consumer Privacy Act ("CCPA") (and new provisions becoming effective January 1, 2023 under the California Privacy Rights Act) that provides for enhanced consumer protections for California residents, enforcement authority by the California Attorney General and/or the California Privacy Protection Agency for violations, and the potential for private litigation, including statutory damages for data security breaches.

Each of these types laws and regulations could impose significant limitations, require changes to our business, or restrict our collection, use or storage of personal data, which may increase our compliance expenses and make our business more costly or less efficient to conduct.

• After the 2008 financial crisis, global regulations on over-the-counter derivatives spearheaded by The Dodd-Frank Wall Street Reform and Consumer Protection Act in the United States and European Market Infrastructure Regulation in the European Union ("EU") have imposed clearing, margin, trade reporting, electronic trading and recordkeeping requirements on market participants.

Alongside their general stabilizing and risk-reducing effect on the markets, these requirements have introduced operational complexity and additional costs to derivatives portfolios.

• The revised Markets in Financial Instruments Directive ("MiFID II Directive") and Regulation ("MiFIR") (together “MiFID II”) applied across the EU and member states of the European Economic Area beginning on January 3, 2018.

Future changes to laws

and regulations in these areas could impose significant limitations on our operations, require changes to our business, or restrict our collection, use or storage of data or related technologies, which may increase our compliance expenses and make our business more costly or less efficient to conduct.

• Regulators have imposed certain clearing, margin, trade reporting, electronic trading and recordkeeping requirements on market participants aimed at market stabilization and risk reduction, such as the Dodd-Frank Wall Street Reform and Consumer Protection Act in the U.S.

and the European Market Infrastructure Regulation in the EU.

T hese requirements have introduced operational complexity and additional costs to derivatives portfolios.

• The revised Markets in Financial Instruments Directive ("MiFID II Directive") and Regulation ("MiFIR") (together “MiFID II”) applies across the EU and member states of the European Economic Area beginning on January 3, 2018.

Implementation of MiFID II has significantly impacted both the structure and operation of EU financial markets.

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For example, we began to pay for third-party investment research used by our UK-based investment manager, T.

Rowe Price International Ltd, in 2018, and we now pay for all the research needs of our investment professionals globally.

Rowe Price International Ltd, in 2018, and we pay for all the research needs of our investment professionals globally.

• New laws or regulations involving ESG integration and disclosure may materially impact the asset management industry.

For example, the EU’s recent action plan on financing sustainable growth includes initiatives to integrate ESG into the financial system.

Furthermore, the SEC and other regulators in the U.S.

have proposed rules to pursue similar initiatives, including additional disclosure obligations that would apply to our business operations, our employee and board diversity and other ESG-related matters.

For example, the EU’s Sustainable Finance Disclosure Regulation imposes mandatory ESG disclosure obligations on asset managers and other financial markets participants, requiring all covered firms to disclose how financial products integrate sustainability risks in the investment process, including whether they consider adverse sustainability impacts, and sustainability-related information for products promoting sustainable objectives.

The availability of such disclosures may impact the investment decisions of European investors.

Furthermore, federal regulators, as well as state legislatures and regulators in the U.S.

have proposed or adopted laws and regulations to pursue similar initiatives, such as the SEC’s proposed climate disclosure rules .

Conversely, some U.S.

states have adopted or proposed legislation or otherwise have taken official positions restricting or prohibiting state government entities from doing certain business with entities they believe are discriminating against particular industries or considering ESG factors in their investment processes and proxy voting.

As jurisdictions globally continue to develop legal frameworks on ESG and sustainability regulations, our industry and business may face increasingly fragmented regulatory frameworks, which may result in complex and potentially conflicting compliance obligations and legal and regulatory uncertainty .

We cannot predict the nature of future changes to the legal and regulatory requirements applicable to our business, nor the extent of the impacts that will result from current or future proposals.

However, any such changes are likely to increase the costs of compliance and the complexity of our operations.

They may also result in changes to our product or service offerings.

The changing regulatory landscape may also impact a number of service providers that provide services to us and, to the extent such service providers alter their services or increase their fees, it may impact our expenses or those of the products we offer.

However, any such changes are likely to increase the costs of compliance and the complexity of our operations, as well as result in changes to our product or service offerings.

The changing regulatory landscape may also impact a number of service providers that provide services to us and, to the extent such service providers alter their operations or increase their fees, it may impact our expenses or those of the products we offer.

We may become involved in legal and regulatory proceedings that may not be covered by insurance.

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From time to time, various claims against us arise in the ordinary course of business, including employment-related claims.

There also has been an increase in litigation and in regulatory investigations in the financial services industry in recent years, including client claims, class action suits, and government actions alleging substantial monetary damages and penalties.

We carry insurance in amounts and under terms that we believe are appropriate.

We cannot be assured that our insurance will cover every liability and loss to which we may be exposed, or that our insurance policies will continue to be available at acceptable terms and fees.

There also has been an increase in litigation and in regulatory investigations in the financial services industry in recent years, including client claims, class action suits, and government actions claiming substantial monetary damages and penalties.

We carry insurance in amounts and under terms that we believe are appropriate, however, we cannot be assured that our insurance will cover every liability and loss to which we may be exposed, or that our insurance policies will continue to be available at acceptable terms and fees.

Certain insurance coverage may not be available or may be prohibitively expensive in future periods.

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TECHNOLOGY RISKS.

We require significant quantities and types of technology to operate our business and would be adversely affected if we fail to maintain adequate infrastructure to conduct or expand our operations or if our technology became inoperative or obsolete.

We depend on significant quantities of technology and, in many cases, highly specialized or proprietary or third-party licensed technology to support our business functions, including among others:

We require significant quantities and types of technology to operate our business and would be adversely affected if we or our third party providers fail to maintain adequate technology to conduct or expand our operations or if our technology became inoperative or obsolete.

We depend on significant quantities of technology and, in many cases, highly specialized, proprietary or third-party licensed technology to support our business functions, including among others:

• securities analysis,

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• regulatory compliance and reporting.

All of our technology systems, including those provided by service providers, are vulnerable to disability or failures due to cyberattacks, natural disasters, power failures, acts of war or terrorism, sabotage, coding errors, and other causes.

All of our technology systems, including those provided or operated by third-party service providers, are vulnerable to disability or failures due to cyberattacks, natural disasters or extreme weather events (which may increase in frequency or intensity as a result of climate change), power failures, acts of war or terrorism, sabotage, coding errors, and other causes.

A suspension or termination of vendor-provided software licenses or related support, upgrades, and maintenance could cause system delays or interruption.

Although we have robust business and disaster recovery plans, if our technology systems, including those provided by service providers, were to fail and we were unable to recover in a timely way, we would be unable to fulfill critical business functions, which could lead to a loss of clients and could harm our reputation.

A technological breakdown or disruption in services from a service provider could also interfere with our ability to comply with financial reporting and other regulatory requirements, exposing us to disciplinary action and liability to our clients.

In addition, our continued success depends on our ability to effectively integrate operations across many systems and/or countries, and to adopt new or adapt existing technologies to meet client, industry, and regulatory demands.

We might be required to make significant capital expenditures to maintain competitive infrastructure.

If we are unable to upgrade our infrastructure in a timely fashion, we might lose clients and fail to maintain regulatory compliance, which could affect our results of operations and severely damage our reputation.

Although we believe we have robust business and disaster recovery plans, if our technology systems, including those provided or operated by third-party service providers, were to fail and we were unable to recover in a timely way, we would be unable to fulfill critical business functions, which could lead to a loss of clients and could harm our reputation.

A technological breakdown or disruption in services could also interfere with our ability to comply with financial reporting and controls and other regulatory requirements, exposing us to regulatory action and liability to our clients.

We might be required to make significant capital expenditures to maintain a competitive technology stack.

If we are unable to upgrade our technology stack in a timely fashion, we may lose clients and fail to maintain regulatory compliance, which could affect our results of operations and severely damage our reputation.

A cyberattack or a failure to implement effective information and cybersecurity policies, procedures and capabilities could disrupt operations and cause financial losses.

We are dependent on the effectiveness of the information and cybersecurity policies, procedures and capabilities we maintain to protect our systems and data.

An externally caused data security incident, such as a cyberattack, a phishing scam, virus, ransomware attack, denial-of-service attack, or an attack launched from within our systems could materially interrupt business operations or cause disclosure or modification of confidential client or competitive information.

In addition, our third-party service providers and other intermediaries with which we conduct business and transmit data could be subject to a successful cyberattack or other data security event, and we cannot ensure that such third parties have all appropriate controls in place to protect the confidentiality of data in the custody of those third parties or to allow them to continue their business operations, including their services to us, in a timely manner.

There have been increasing numbers of publicized cybersecurity incidents in recent years impacting other financial services firms as well as firms in other industries.

Our use of third-party service providers and cloud technologies could heighten this risk.

An externally caused data security incident, such as a cyberattack, a phishing scam, virus, ransomware attack, denial-of-service attack, or an attack launched from within our systems could compromise the integrity of confidential client or competitive information and materially interrupt our business operations.

In addition, our third-party service providers and other intermediaries, with which we conduct busi ness, could also be subject to cyberattacks or other data security events, and we cannot ensure that such third parties have all appropriate controls in place to protect the integrity and confidentiality of our data that is in their custody or to allow them to continue their business operations, including their services to us, in a timely manner.

There have been increasing numbers of publicized cybersecurity incidents in recent years impacting financial services firms as well as firms in other industries.

Our use of third-party service providers and cloud technologies

could heighten this risk.

Should the technology operations on which we rely be compromised, we may have to make significant investments to upgrade, repair or replace our technology infrastructure or third-party service providers and may not be able to make such investments on a timely basis.

Although we maintain insurance coverage that we believe is reasonable, prudent and adequate for the purpose of our business, it may be insufficient to protect us against all losses and costs stemming from breaches of security, cyberattacks and other types of unlawful activity, or any resulting disruptions from such events.

Although we maintain insurance coverage, under terms that we believe are reasonable, prudent and adequate for the purpose of our business, it may be insufficient to protect us against all losses and costs stemming from breaches of security, cyberattacks and other types of unlawful activity, or any resulting disruptions from such events.

We could be subject to losses if we fail to properly safeguard and maintain confidential data.

As part of our normal operations, we maintain and transmit confidential data about our clients, associates and other parties, as well as proprietary data relating to our business operations.

Our business operations rely on such data being available as and when needed and not being subjected to loss or unauthorized access or alteration.

We maintain a system of internal controls designed to provide reasonable assurance that both inadvertent errors and fraudulent activity, including misappropriation of assets, fraudulent financial reporting, and unauthorized access to sensitive or confidential data, is either prevented or detected in a timely manner.

We also leverage cloud-based solutions for the transmission and storage of this data.

Our systems, or those of third-party service providers we may use to maintain and transmit such data, could be victimized by unauthorized users or corrupted by computer viruses or other malicious software code.

We also leverage cloud-based solutions for the transmission and storage of data.

Our systems, or those of the third-party service providers we use to maintain or transmit such data, could be accessed by unauthorized users or corrupted by computer viruses or other malicious software code.

Additionally, authorized persons could inadvertently or intentionally release or alter confidential or proprietary data.

Such disclosure could, among other things:

Any of these types of events could, among other things:

• seriously damage our reputation,

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• allow competitors access to our proprietary business data,

• materially impair our business operations,

• subject us to liability for a failure to safeguard data of clients, associates, and other parties,

• result in the termination of contracts by our existing clients,

• subject us to regulatory investigations, actions or fines, and potential litigation involving regulators, stockholders, or other members of the public, and

• subject us to disclosure obligations, regulatory investigations, actions or fines, and potential litigation involving regulators, stockholders, or other members of the public, and

• require significant capital and operating expenditures to investigate and remediate the breach, and organizational costs to mitigate against future incidents.

Furthermore, if any person, including any of our associates, negligently disregards or intentionally overrides or circumvents our established controls with respect to confidential data, or otherwise mismanages or misappropriates that data, we could be subject to significant monetary damages, regulatory enforcement actions, fines and/or criminal prosecution in one or more jurisdictions.

As noted above, we are subject to numerous laws and regulations designed to protect confidential data, such as U.S.

federal and state laws and foreign laws and regulations governing the privacy and protection of personal or other confidential data, such as the EU’s General Data Protection Regulation and similar types of laws enacted in several U.S.

states and other jurisdictions in Asia.

Any failure to properly safeguard and maintain confidential data creates risk that we could be found to be in violation of various laws and regulations.

Unresolved Staff Comments.

As noted above, we are subject to numerous laws and regulations governing privacy and the protection of personal or other data in the U.S., EU and other jurisdictions we operate in .

Any failure to properly safeguard and maintain confidential data creates risk that we could be found to be in violation of laws and regulations and subject us to disclosure obligations, regulatory investigations, actions or fines, and litigation.

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 1A. Risk Factors