What changed in this filing

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Item 1A. Risk Factors

2026-02-13 compared with 2025-02-14 · 99 added, 103 removed, 311 unchanged (39% of the section changed)

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• Investment Performance.

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.

If the investment performance of our managed investment products 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.

We derive a significant portion of our revenues from advisory fees on managed investment portfolios.

We derive a significant portion of our revenues from advisory fees on managed investment products.

A downturn in financial markets would cause the value of assets under our management to decrease, and may also cause investors to withdraw their investments, thereby further decreasing the level of assets under our management.

• Investment Concentration.

The allocation of investment products for assets under management within market segments or strategies may impact associated fees that can vary depending on product offerings.

Our fees vary depending on product offering, and our assets under management may be overly concentrated within limited market segments or strategies, which could impact our revenues should these fees be impacted.

• Investor Mobility.

Our investors may generally 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;

taking profits from their investments;

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

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

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

investors taking profits from their investments;

product risk characteristics, which could cause investors to move assets to other investment managers;

and investor and market sentiments.

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• Investing Trends.

Changes in investing trends, particularly investor preference for passive or alternative investment products as well as increasing investor preference for environmentally and socially responsible investment products, and changes in retirement savings trends, may reduce interest in our products and may alter our mix of assets under management.

Changes in investing trends, particularly investor preference for passive or alternatives investment products as well as changes in retirement savings trends, may reduce interest in our products and may alter our mix of assets under management.

• Interest Rate Changes.

Investor interest in and the valuation of our fixed income and multi-asset investment portfolios are affected by changes in, as well as uncertainty about interest rates.

Investor interest in and the valuation of our fixed income and multi-asset investment products are affected by changes in as well as uncertainty about interest rates.

• Geo-Political Exposure.

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, and the recent conflicts in the Middle East, including the Israel-Hamas war, and potential escalation of such conflicts), trade wars or tariffs (including those imposed or threatened by the U.S.), currency fluctuations, illiquidity and capital controls, and changes in legislation related to ownership limitations.

Our managed investment products 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, recent events in Venezuela and the on-going conflicts in the Middle East), trade policies, wars or tariffs (including those imposed or threatened by the U.S.

and retaliatory tariffs by U.S.

trading partners), currency fluctuations, market volatility, illiquidity and capital controls, and changes in legislation related to ownership limitations.

• Government Shutdown.

federal government periodically experiences funding gaps that result in partial or complete shutdowns of government operations.

A prolonged shutdown could adversely impact the U.S.

economy, financial markets, and our business directly and indirectly.

During a shutdown, many federal agencies, such as the SEC, suspend or delay regulatory approvals.

A delay in the approval of new products

which we intend to offer could materially impact our performance and the timing with which we begin to attract investors.

Additionally, a shutdown could have broader negative effects on consumer and business confidence, the financial markets, and the overall economy.

Uncertainty regarding the duration or frequency of government shutdowns may contribute to market volatility and increased redemptions from our products.

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.

A majority of our revenues are based on contracts with collective investment funds that are subject to termination without cause and on short notice.

We provide investment advisory, distribution, and other administrative services to collective investment funds under various agreements.

Investment advisory services are provided to each sponsored investment fund under individual investment management agreements, which can be terminated on short notice.

A majority of our revenues are based on contracts with commingled vehicles that are subject to termination without cause and on short notice.

We provide investment advisory, distribution, and other administrative services to commingled vehicles under various agreements.

Investment advisory services are provided to each collective investment fund under individual investment management agreements, which can be terminated on short notice.

In addition, the Board of each T.

Rowe Price U.S.

mutual fund must annually approve the terms of the investment management and service agreements.

Rowe Price collective investment fund seeks to lower the fees that we receive or terminate its contract with us, we would experience a decline in fees earned from the collective investment funds, which could have a material adverse effect on our revenues and net income.

mutual fund and ETF must annually approve the terms of the investment management and service agreements.

If a collective investment fund seeks to lower the fees that we receive or terminate its contract with us, we would experience a decline in fees earned from the collective investment funds, which could have a material adverse effect on our revenues and net income.

We operate in an intensely competitive industry.

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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 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.

Furthermore, many aspects of the asset management industry are seeing increased regulatory activity and scrutiny, in particular related to transparency and unbundling of fees, inducements, conflicts of interest, risk management, cybersecurity, technology, privacy and data protection, sustainability, 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.

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We use various quantitative models (including ones supported by AI and machine-learning algorithms) to support investment decisions and investment processes, including those related to portfolio management and portfolio risk analysis, as well as those related to client investment or savings advice or guidance.

Any errors in the underlying

models or model assumptions could have unanticipated and adverse consequences on our business and reputation.

Any errors in the underlying models or model assumptions could have unanticipated and adverse consequences on our business and reputation.

Any damage to our reputation could harm our business and lead to a loss of revenues and net income or access to capital.

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

For example, ESG issues have been the subject of increased focus by regulators, clients and other stakeholders.

Various clients and stakeholders have divergent views on ESG matters, with some aiming to increase their exposure to ESG investing and some choosing not to invest in products or strategies with an ESG investment objective, including in the countries in which we operate and invest, as well as states and localities where we serve public sector clients.

These differences pose challenges for us to manage divergent goals and preferences, and increase the risk that any action or lack thereof by us concerning ESG, or any actual or perceived failure to adequately address the ESG expectations will be viewed negatively by some stakeholders, which could adversely impact our reputation and business.

We also communicate certain initiatives and goals for our corporate and investing activities related to ESG matters.

We could be scrutinized or criticized for the scope or nature of any such initiatives or goals, and may not be able to accomplish them within our anticipated timeframe or at all.

Our global presence and investments on behalf of our clients around the world could also lead to heightened scrutiny and criticism in an increasingly fragmented geopolitical landscape.

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While we maintain policies, procedures, and controls to reduce the likelihood of unauthorized activities, we are subject to the risk that our personnel or third parties acting on our behalf may circumvent controls or act in a manner inconsistent with our policies and procedures.

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.

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.

In addition, should we be subject to a cybersecurity event or data breach, or the target of cyber criminals who seek to defraud our clients, our reputation could be harmed and we could suffer financial loss.

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.

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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 alternatives products include investments in private credit, real estate, and equity investments in private companies, which may expose us to new or increased risks and liabilities and to reputational harm.

Our alternatives products include investments in private credit, real estate, and equity investments in private companies, which may expose our investment products, clients and us to new or increased risks and liabilities.

Our alternatives products include investments in private credit, real estate, infrastructure and private companies, which may expose us to new or increased risks and liabilities and to reputational harm.

Our alternatives products include investments in private credit, real estate, infrastructure and private companies, which may expose our investment products, clients and us to new or increased risks and liabilities.

These may include:

• risks related to the potential illiquidity, valuation and disposition of such investments;

• risks related to the potential illiquidity, valuation, concentration and disposition of such investments;

• risks related to emerging and less established companies that have, among other things, short operating histories, not yet achieved or sustained profitability, new technologies and products, nascent control functions, quickly evolving markets and limited financial resources;

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• risks related to investment in “distressed” securities, including abrupt and erratic market movements and above-average price volatility;

• risks associated with a lack of diversification, such that any adverse change in one or a small number of issuers could have a material adverse effect on an investment product or client’s investments;

• risks relating to the use of leverage, including as a result of changes in interest rates or an inability to timely obtain and effectively deploy leverage;

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• exposure to stringent and complex foreign, federal, state and local laws, ordinances and regulations;

• changes to the supply and demand for properties and/or tenancies;

• risks related to the availability, cost, coverage and other limitations on insurance;

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While we are under no obligation to provide financial support to our investment products, any financial support provided would reduce capital available for other purposes and may have an adverse effect on revenues and net income.

Our hedging strategies utilized to mitigate risk may not be effective, which could impact our earnings.

We employ hedging strategies related to our supplemental savings plan and other incentive plans in order to hedge the liability related to the plans.

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.

Our hedging strategies utilized to mitigate risk may not be effective, which could impact our net income.

We employ hedging strategies related to our deferred compensation plans in order to hedge the liability related to the plans.

In the event that our hedging strategies are not effective, the resulting impact may adversely affect our net income.

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.

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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.

For example, a financial transaction tax on stocks, bonds and a broad range of financial instruments has been proposed in the United States and the EU.

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.

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Increasing competition for these distribution and sales channels as well as regulatory changes and initiatives may cause our distribution costs to rise, could cause further cost increases in the future, or could otherwise negatively impact the distribution of our products.

Mergers, acquisitions, and other

ownership or management changes could also adversely impact our relationships with these third-party intermediaries.

Mergers, acquisitions, and other ownership or management changes could also adversely impact our relationships with these third-party intermediaries.

As a result of these changes, more of our revenues may be concentrated with fewer intermediaries, which may impact our dependence on these intermediaries.

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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;

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, 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 products that we manage;

• causing disruptions in national or global economies that decrease investor confidence and make investment products generally less attractive;

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Colorado Springs, Colorado;

Forth Worth, Texas;

Fort Worth, Texas;

New York City, New York;

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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 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 of pandemics, epidemics or disease outbreaks to our personnel and our facilities, and to date have been successful in navigating the challenges presented by the COVID-19 pandemic, no assurance can be given that the steps we have taken will continue to be effective or appropriate against future pandemics, epidemics or disease outbreaks.

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, no assurance can be given that the steps we have taken will continue to be effective or appropriate against future pandemics, epidemics or disease outbreaks.

In the event that our personnel become incapacitated by pandemics, epidemics or disease outbreaks, our business operations may be impacted, which could lead to reputational and financial harm.

Our investment income and asset levels may be negatively impacted by fluctuations in our investment portfolio.

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.

In addition, related investment income has fluctuated significantly over the years depending upon the performance of our corporate investments, including the impact of market conditions and interest rates, and the size of our corporate money market and longer-term collective investment fund holdings.

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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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.

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

In addition, concerns regarding the soundness of other financial services institutions may generate public concerns regarding us or the financial services industry more broadly, which could harm our reputation and adversely affect our results of operations and financial condition, even if the underlying matters impacting other financial institutions are of limited or no direct applicability to us.

We may review and pursue strategic transactions in order to maintain or enhance our competitive position and these could pose risks.

From time to time, we consider strategic opportunities, including potential acquisitions, dispositions, consolidations, organizational restructurings, joint ventures or similar transactions, any of which may impact our business.

From time to time, we consider strategic opportunities, including potential acquisitions, dispositions, consolidations, organizational restructurings, partnerships, any of which may impact our business.

We cannot be certain that we will be able to identify, consummate and successfully complete such transactions, and no assurance can be given with respect to the timing, likelihood or business effect of any possible transaction.

These initiatives typically involve a number of risks and present financial, managerial and operational challenges to our ongoing business operations.

In addition, acquisitions and related transactions involve risks, including unanticipated problems regarding integration of investor account and investment security recordkeeping, additional or new regulatory requirements, operating facilities and technologies, and new personnel;

In addition, acquisitions and related transactions involve risks, including unanticipated problems regarding integration

of investor account and investment security recordkeeping, additional or new regulatory requirements, operating facilities and technologies, and new personnel;

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

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

We own a 23% investment in UTI Asset Management Company Ltd ("UTI"), an Indian asset management company, and we may consider non-controlling minority investments in other entities in the future.

We may not realize future returns from such investments or any collaborative activities that may develop in the future.

Climate change-related risks could adversely affect our business, products, operations and clients, which may cause our AUM, revenues and earnings to decline.

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

Within our investment portfolios, changes in weather patterns around the world can impact companies in which we invest on behalf of our clients.

Within our investment products, changes in weather patterns around the world can impact companies in which we invest on behalf of our clients.

Weather pattern changes may cause investment professionals to re-evaluate investments in affected companies.

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We operate in a number of jurisdictions outside of the United States.

Our international operations require us to comply with the legal and regulatory requirements of various foreign jurisdictions and expose us to political environments and risks that can compare less favorably than those in the United States.

Our international operations require us to comply with complex legal and regulatory requirements of various foreign jurisdictions that at times may be contradictory and expose us to political environments and risks that can compare less favorably than those in the United States.

Our foreign business operations are also subject to the following risks:

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• the inability to transact in various investments or to repatriate the proceeds from our investments from countries outside the U.S.;

• the potential nationalization of our property or that of the companies in our investment portfolios;

• the potential nationalization of our property or that of the companies in our investment products;

• fluctuations in currency exchange rates which may result in substantial negative effects on assets under our management, revenues, expenses, and assets in our U.S.

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• 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.

Our investment income and asset levels may be negatively impacted by fluctuations in our investment portfolio.

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.

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.

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

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.

HUMAN CAPITAL RISKS.

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While our personnel can generally terminate their employment with us at any time, with most required to provide little to no notice, we have recently adopted more significant notification requirements for certain key positions, which may cause some personnel or candidates to 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.

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

In addition, due to the global nature of our investment advisory business, our key personnel may have reasons to travel to regions susceptible to higher risk of civil unrest, organized crime or terrorism, and we may be unable to ensure the safety of personnel traveling to these regions.

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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 or our third party providers fail to maintain adequate and secure technology to conduct or expand our operations or if our technology became inoperative or obsolete.

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, resilient and secure 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:

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• regulatory compliance and reporting.

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, system outages, and other causes.

All of our technology systems, including those provided or operated by third-party service providers, are not fully redundant and are vulnerable to disability or failures due to cyberattacks, natural disasters or extreme weather events, power failures, acts of war or terrorism, sabotage, coding errors, system outages, and other causes.

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

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.

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, potentially resulting in financial losses that may not be sufficiently mitigated by insurance coverage.

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, including, for example, generative AI technology.

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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, 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 business, 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.

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

An externally caused data security incident, such as a cyberattack, social engineering attacks (including phishing, impersonation and identity takeover attempts), virus, ransomware attack, denial-of-service attack, or an attack launched from within our systems could compromise the integrity of personal data of clients, personnel and other parties, as well as 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 business, 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, confidentiality and security 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, including incidents of increasing sophistication and scope, all of which have resulted in greater harm.

Our use of third-party service providers 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.

Should the technologies 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, 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.

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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 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 personal or confidential sensitive data, is either prevented or detected in a timely manner.

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

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• 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 personnel, negligently disregards or intentionally overrides or circumvents our established controls with respect to personal or 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.

The recent advancements in and increased use of artificial intelligence (AI) present risks and challenges that may adversely impact our business.

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The legal and regulatory environment relating to AI is uncertain and rapidly evolving, in the U.S., and internationally, and includes regulation targeted specifically at AI technology, as well as provisions in intellectual property, privacy, consumer protection, employment and other laws applicable to the use of AI.

For example, any failure to properly safeguard and maintain personal data in connection with our use of AI creates risk of us violating privacy laws and regulations in jurisdictions we operate in, and could subject us to disclosure obligations, regulatory investigations, actions or fines, and litigation.

For example, any failure to properly safeguard and maintain personal data in connection with our use of AI creates potential risk of violating applicable privacy laws and regulations in jurisdictions we operate in, and could subject us to disclosure obligations, regulatory investigations, actions or fines, and litigation.

These evolving laws and regulations could require changes in our implementation of AI technology, increase our compliance costs and the risk of non-compliance, and restrict or impede our ability to develop, adopt and deploy AI technologies efficiently and effectively.

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In addition, the complexity of many AI models makes it challenging to understand why they are generating particular outputs.

This limited transparency increases the challenges associated with assessing the proper operation of AI technology, understanding and monitoring the capabilities of the AI technology developed by third parties, and, to that extent, are dependent in part on the manner in which those third parties develop and train their models, including risks arising from the inclusion of any unauthorized material in the training data for their models, and the effectiveness of the steps these third parties have taken to limit the risks associated with the output of their models, matters over which we may have limited visibility.

This limited transparency increases the challenges associated with assessing the proper operation of AI technology, appreciating the risks and monitoring the capabilities of the AI technology developed by third parties, and, to that extent, are dependent in part on the manner in which those third parties develop and train their models, including for example, risks arising from the inclusion of any unauthorized material in the training data for their models, and the effectiveness of the steps these third parties have taken to limit the risks associated with the output of their models, matters over which we may have limited visibility.

Further, the use of AI technologies requires ongoing operational controls and procedures and the development and deployment of appropriate protections and safeguards.

AI technologies may also disrupt the competitive landscape for investment management and technology services, including in commercial and operational areas such as data aggregation and quantitative models.

Any of these risks could expose us to liability or adverse legal or regulatory consequences and harm our reputation and the public perception of our business or the effectiveness of our security measures.

Furthermore, we may face competition from investment managers who use AI in lieu of human managers, which may lead to lower cost solutions which could impact our business.

In addition to our use of AI technologies, we are exposed to risks arising from the use of AI technologies by bad actors to commit fraud and misappropriate funds and to facilitate cyberattacks.

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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.

Additionally, over the past several years the pace

and scope of new rules, regulations, executive orders, directives, 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 processes to comply.

Furthermore, in recent years several governments have proposed or enacted policies, legislation, and executive actions relating to ESG and DEI initiatives for the private sector.

Furthermore, in recent years several governments have proposed or enacted policies, legislation, and executive actions relating to sustainability and human capital initiatives for the private sector.

More recently, interested parties on both sides of the debate have sought to utilize the courts, social media and other means to change the practices of companies.

We communicate certain approaches regarding environmental, social, diversity, and other ESG-related matters in our regulatory filings or in other public disclosures.

We communicate certain approaches regarding environmental, social, human capital, and other related matters in our regulatory filings or in other public disclosures.

We could be criticized for the accuracy or completeness of the disclosure and for the scope or nature of such initiatives or approaches, or for any changes to them over time.

In addition, the U.S.

administration and other foreign governments have pursued deregulation measures that may create regulatory uncertainty for our business, and potentially create divergent regulatory frameworks, as other state and local governments may take action to fill the vacuum.

Any changes in the regulatory framework applicable to our business, may impose additional costs, require the attention of our senior management, result in limitations on the manner in which business is conducted, or may ultimately have an adverse impact on the competitiveness of our business.

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

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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 and costly litigation.

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.

Our regulatory environment is frequently altered by new laws and regulations and by revisions to, and evolving interpretations of, existing regulations.

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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 which may impact our expenses and profitability.

C ertain new regulatory proposals that may impact or relate to our business, include cybersecurity disclosures, sustainability, privacy and data protection, financial products, fiduciary and fund-related reforms, digital assets, tax compliance, and other investment management disclosure and compliance requirements.

F uture 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.

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

In September 2024, a new rule expanding the definition of, and requirements for, an investment advice fiduciary under ERISA (“Retirement Security Rule”) became effective, which applies to retirement plans and accounts that comprise a majority of our accounts.

We are assessing the impact of the Retirement Security Rule on our business.

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

We have registered certain subsidiaries with the CFTC, subjecting us to additional regulatory requirements and costs, but also providing us additional flexibility to utilize such products.

We have registered certain subsidiaries with the CFTC, subjecting us to additional regulatory requirements and costs, but also providing us with additional flexibility to utilize such products.

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

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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 privacy, data collection and use, including the EU’s GDPR and laws enacted by a growing number of U.S.

• 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 General Data Protection Regulation (“GDPR”) and laws enacted by a growing number of U.S.

cybersecurity;

current and emerging technology, including AI and automated decision-making;

current and emerging technology, including AI and automated decision-making technologies;

storage, localization, retention and destruction of data;

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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, the SEC proposed new rules in 2023 that would require broker-dealers and investment advisers, when engaging or communicating with investors using predictive data analytics, to evaluate such technologies for conflicts of interest and, where identified, eliminate or neutralize the conflict of interest.

If adopted as proposed, these rules could encompass a wide range of forward-looking uses of technology applications and impose significant operational burdens and costs.

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.

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 and related regulations in the U.S.

and the European Market Infrastructure Regulation in the EU.

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

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

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.

In addition, the EU’s Corporate Sustainability Reporting Directive imposes enhanced sustainability reporting requirements for certain EU companies and non-EU companies, with phased reporting requirements beginning in 2025 for certain companies.

In the U.S., states have proposed or adopted laws and regulations to pursue similar initiatives, such as California’s Climate Accountability Package, federal regulations on ESG disclosures, such as the SEC's proposed climate disclosure rules that have been stayed, are expected to halt under the new administration in the U.S.

These requirements have introduced operational complexity and additional costs to derivatives products.

• New laws or regulations involving sustainability integration and disclosure may materially impact the asset management industry, including the EU's Sustainable Finance Disclosure Regulation, the EU’s Corporate Sustainability Reporting Directive, and similar initiatives proposed or adopted by various U.S.

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.

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

As jurisdictions globally continue to develop legal frameworks on sustainability 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.

• Recently, several significant administrative law cases were decided by the U.S.

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Administrative Procedure Act required courts to exercise their independent judgment when deciding whether an agency had acted within its statutory authority, and that courts may not defer to an agency interpretation solely because a statute is ambiguous, overruling the long-held Chevron decision that had required that courts defer to reasonable agency interpretations of statutes and agency action.

These decisions may result in additional legal challenges to regulations and guidance issued by federal regulatory agencies that we or the companies we invest in have relied on and intend to rely on in the future.

These decisions may result in additional legal challenges to regulations and guidance issued by federal regulatory agencies that we or the companies our products invest in have relied on and intend to rely on in the future.

Any such challenges, if successful, could have a material impact on our business because we may make decisions based on legal guidance that may be overruled.

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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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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.

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, and our insurance may not be sufficient to cover our liability which would impact our financial results.

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What changed 10-K

Item 1A. Risk Factors