# RIVERSOURCE DISTRIBUTORS, INC. X-17A-5 (2022-02-25) — Broker-dealer annual report

- Company: RIVERSOURCE DISTRIBUTORS, INC.
- Form: X-17A-5
- Filed: 2022-02-25
- Period: 2021-12-31
- Accession: 0000862988-22-000004
- CIK: 1347882
- File #: 8-67196
- Type: Broker-dealer
- Material weakness: No
- Auditor: Pricewaterhouse Coopers LLP
- Auditor location: Chicago, IL
- Contact: Michael S. Mattox
- Phone: 612-678-0262
- Email: michael.s.mattox@ampf.com
- Website: ampf.com
- Signed by: Michael S. Mattox (Chief Financial Officer)

Original filing: https://www.sec.gov/Archives/edgar/data/1347882/000086298822000004/rdilt.pdf

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FINANCIAL STATEMENTS

AND SUPPLEMENTAL I FORMATION

RiverSource Distributors, Inc.

SEC File Number: 8-67196

As ofand for the Year Ended December31,202I

With Reports of Independent Registered Public Accounting Finn Required by SEC Rule I 7a-5.

This report is deemed confidential in a ccordance with rule 17a-5(e)(3) under the Securities Exchange Act of 1934. A Statement ofFinancial Conclition and Independent Auclitor's Report, bound separately, has been filed with the U.S. Securities and Exchangesim ultaneously as a Public Document.

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|                                                                                                                                      | UNITED STATES                                                                                                                                                                                                                                    |                           | 0MB APPROVAL                              |  |
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|                                                                                                                                      | SECURITIES AND EXCHANGE COMMISSION<br>Washington, D.C. 20549                                                                                                                                                                                     |                           |                                           |  |
|                                                                                                                                      | ANNUAL<br>REPORTS                                                                                                                                                                                                                                |                           | hours per response. 12                    |  |
|                                                                                                                                      |                                                                                                                                                                                                                                                  | 5fC fllf NUMBER           |                                           |  |
|                                                                                                                                      |                                                                                                                                                                                                                                                  | 8-67196                   |                                           |  |
|                                                                                                                                      | Ill<br>PART                                                                                                                                                                                                                                      |                           |                                           |  |
|                                                                                                                                      | FACING PAGE<br>Information Required Pursuant to Rules 17a-S, 17a-12, and 18a-7 under the Securities Exchange Act of 1934                                                                                                                         |                           |                                           |  |
| FILING FOR THE PERIOD BEGINNING                                                                                                      | 01/01/2021<br>____ AND ENDING 12/31/2021<br>_                                                                                                                                                                                                    |                           | ___ _                                     |  |
|                                                                                                                                      | MM/DD/YY                                                                                                                                                                                                                                         |                           | MM/DD/YY                                  |  |
|                                                                                                                                      | A. REGISTRANT IDENTIFICATION                                                                                                                                                                                                                     |                           |                                           |  |
| RiverSource<br>NAME OF FIRM:<br>_                                                                                                    | Distributors,<br>Inc.                                                                                                                                                                                                                            |                           | ________________ _                        |  |
| TYPE OF REGISTRANT (check all applicable boxes):<br>Cd Broker-dealer<br>D Check here if respondent 15 also an OTC derivatives dealer | D<br>D Security-based swap dealer                                                                                                                                                                                                                |                           | Major security-based swap participant     |  |
|                                                                                                                                      | ADDRESS OF PRINCIPAL PLACE OF BUSINESS: (Do not use a P.O. box no.)                                                                                                                                                                              |                           |                                           |  |
| 802<br>Ameriprise<br>Financial                                                                                                       | South<br>Center,<br>707<br>2nd<br>Avenue                                                                                                                                                                                                         |                           |                                           |  |
|                                                                                                                                      | (No. and Street)                                                                                                                                                                                                                                 |                           |                                           |  |
| Minneapolis                                                                                                                          | MN                                                                                                                                                                                                                                               |                           | 55474                                     |  |
| (Cltvl                                                                                                                               | (State)                                                                                                                                                                                                                                          |                           | (Zip Code)                                |  |
| PERSON TO CONTACT WITH REGARD TO THIS FILING                                                                                         |                                                                                                                                                                                                                                                  |                           |                                           |  |
| Michael<br>Mattox                                                                                                                    | 612-678-0262                                                                                                                                                                                                                                     | michael.s.mattox@ampf.com |                                           |  |
| (Name)                                                                                                                               | (Area Code -Telephone Number)                                                                                                                                                                                                                    |                           | (Email Address)                           |  |
|                                                                                                                                      | B. ACCOUNTANT IDENTIFICATION                                                                                                                                                                                                                     |                           |                                           |  |
|                                                                                                                                      | INDEPENDENT PUBLIC ACCOUNTANT whose reports are contained in this filing•                                                                                                                                                                        |                           |                                           |  |
| PricewaterhouseCoopers,                                                                                                              | LLP                                                                                                                                                                                                                                              |                           |                                           |  |
|                                                                                                                                      | (Name - If individual, state last, first, and middle name)                                                                                                                                                                                       |                           |                                           |  |
| One North Wacker Or.                                                                                                                 | Chicago                                                                                                                                                                                                                                          | IL                        | 60606                                     |  |
| (Address)                                                                                                                            | (City)                                                                                                                                                                                                                                           | (State)                   | (Zip Code)                                |  |
| 10/20/2003                                                                                                                           |                                                                                                                                                                                                                                                  | 238                       |                                           |  |
| (Date of Registration with PCAOB (lf a                                                                                               | licable                                                                                                                                                                                                                                          |                           | {PCAOB R, ;,t,aUoo N,mbec, if applicable) |  |
|                                                                                                                                      | FOR OFFICIAL USE ONLV                                                                                                                                                                                                                            |                           |                                           |  |
| CFR 240.17a-5(e)(1 )(Ii), If applicable.                                                                                             | • Claims for exemption from the requirement that the annual reports be covered by the reports of an independent public<br>accountant must be supported by a statement of facts and circumstances relied on as the basis of the exemption. See 17 |                           |                                           |  |

Persons who are to respond to the collectlon of Information contained ln this form are not required to respond unless the form displays a currently valid 0MB control number.

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### OATH **OR AFFIRMATION**

I, Michael S. Mattox \_\_\_\_\_\_\_\_\_\_\_\_ \_, swear (or affirm) that, to the best of my knowledge and belief, the fi;ancial report pertaining to the firm of RiverSOUfce Distributors, Inc. \_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_ \_\_, as of

December 31 2� is true and correct. I further swear (or affirm) that neither the company nor any partner, officer, director, or equivalent person, as the case may be, has any proprietary interest In any account classified solely as that of a customer.

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**SigA2./�\_4L-**Tltle:

Chief Financial Officer

Notary Public

### **This filing\*\* contains (check all applicable bo><es):**

- c;a **(a)** Statement of financial condition.
- D (b) Notes to consolidated statement of financial condition.
- C3 (c) Statement of income (loss) or, if there is other comprehensive income in the period(s) presented, a statement of comprehensive income (as defined in§ 210.1-02 of Regulation S-X).
- C3 (d) Statement of cash flows.
- C3 (e) Statement of changes in stockholders' or partners' or sole proprietor's equity.
- D (fl Statement of changes In liabilities subordinated to claims of creditors.
- C3 (g) Notes to consolidated financial statements.
- C3 (h) Computation of net capital under 17 CFR 240.1Sc3-1 or 17 CFR 240.18a-1, as applicable.
- D (i) Computation of tangible net worth under 17 CFR 240.18a-2.
- D (l) Computation for determination of customer reserve requirements pursuant to Exhibit A to 17 CFR 240.1Sc3-3.
- D (kl Computation for determination of security-based swap reserve requirements pursuant to Exhibit B to 17 CFR 240.1Sc3-3 or Exhibit A to 17 CFR 240.18a-4, as applicable.
- **D** (I) Computation for Determination of **PAS** Requirements under Exhibit **A** to§ 240.1Sc3-3.
- 0 (ml Information relating to possession or control requirements for customers under 17 CFR 240.1Sc3-3.
- 0 (n) Information relating to possession or control requirements for security-based swap customers under 17 CFR 240.15c3-3(p)(2) or 17 CFR 240.18a-4, as applicable.
- C3 (o) Reconciliations, including appropriate explanations, of the FOCUS Report with computation of net capital or tangible net worth under 17 CFR 240.1Sc3-1, 17 CFR 240.lSa-1, or 17 CFR 240.lBa-2, as applicable, and the reserve requirements under 17 CFR 240.1Sc3-3 or 17 CFR 240.lSa-4, as applicable, if material differences exist, or a statement that no material differences Q)(i�t.
- 0 (p) Summary of financial data for subsidiaries not consolidated in the statement of financial condition.
- 0 (q) Oath or affirmation In accordance with 17 CFR 240.17a-5, 17 CFR 240.17a-12, or 17 CFR 240.18a-7, as applicable.
- 0 (r) compliance report In accordance with 17 CFR 240.17a•S or 17 CFR 240.18a-7, as applicable.
- C3 (s) Exemption report In accordance with 17 CFR 240.17a-S or 17 CFR 240.lSa-7, as applicable.
- D (t) Independent public accountant's report based on an examination of the statement of financial condition.
- D (u) Independent public accountant's report based on an examination of the financial report or financial statements under 17 CFR 240.17a-S, 17 CFR 240.lSa-7, or 17 CFR 240.17a-12, as applicable.
- D (v) Independent public accountant's report based on an examination of certain statements In the compliance report under 17 CFR 240.17a-S or 17 CFR 240.18a-7, as applicable.
- 0 (w) independent public accountant's report based on a review of the exemption report under 17 CFR 240.17a-5 or 17 CFR 240.lBa-7, as applicable.
- 0 (x) Supplemental reports on applying agreed-upon procedures, in accordance with 17 CFR 240.1Sc3-le or 17 CFR 240.17a-12, as applicable.
- 0 (y) Report describing any material inadequacies found to exist or found to have existed since the date of the previous audit, or a statement that no material inadequacies exist, under 17 CFR 240.l 7a-12(k).
- □ (z) Other: \_
- *"To reQuest confidential treatment of certain portions of rhis fi/inq, see* 17 *CFR 240.17a-5(e)(3) or 17 CFR Z40.18a-7(d)(ZJ, as applicable.*

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# RiverSourceDistributors, Inc. Financial Statements and Supplemental Information Year ended December 31, 2021 Confidential Treatment Requested

## **Contents**

| Report of independent Registered Public Accountilg Finn  I                             |  |
|----------------------------------------------------------------------------------------|--|
| Fina n cia I Statements:                                                               |  |
| Statement of Filancia I Condition  3                                                   |  |
| Statement of �ratvns  4                                                                |  |
| Statement of Changes in Stockhokier's Equity  5                                        |  |
| Statement of Cash Fbws  6                                                              |  |
| Notes to Financia I Statements.  7                                                     |  |
| Supplemental In fonnation pursuant to SEC Rule I 7a-S:                                 |  |
| Computation of Net Capital pursuant to SEA Rule 1Sc3-l  I 6                            |  |
| In formation for Detennination ofReserve Requirements                                  |  |
| pursuant to SEA Rule 15c3-3  17                                                        |  |
| RiverSource Distributors, lnc.'s Exernpfon Report  18                                  |  |
| Report of Independent Registered Public Accountilg Finn Required by SEC Rule 17a-S  19 |  |

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## **Report of Independent Registered Public Accounting Firm**

To the Board of Directors and Shareholder of RiverSource Distributors, Inc.

### **Opinion on** *the Financial Statements*

We have audited the accompanying Statement of Financial Condition of RiverSource Distributors, Inc. (the "Company") as of December 31, 2021, and the related Statements of Operations, of Changes in Stockholder's Equity and of Cash Flows for the year then ended, including the related notes (collectively referred to as the "financial statements"). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2021, and the results of its operations and its cash flows for the year then ended in conformity with accounting principles generally accepted in the United States of America.

## *Basisfor Opinion*

These financial statements are the responsibility of the Company's managemenl. Our responsibility is to express an opinion on the Company's financial statements based on our audit. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audit of these financial statements in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud.

Our audit included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audit also included evaluating the accounting principles used and significant estimates made by management, as well as, evaluating the overall presentation of the financial statements. We believe that our audit provides a reasonable basis for our opinion.

### *Supplemental* **lriformation**

The Computation of Net Capital pursuant to SEA Rule 15c3-1 and Information for Determination of Reserve Requirements pursuant to SEA Rule 15c3-3 have been subjected to audit procedures performed in conjunction with the audit of the Company's financial statements. The supplemental information is the responsibility of the Company's management. Our audit procedures included determining whether the supplemental information reconciles to the financial statements or the underlying accounting and other records, as applicable, and performing procedures to test the completeness and accuracy of the information presented in the supplemental information. In forming our opinion on the supplemental information, we evaluated whether the supplemental information, including its form and content, is presented in conformity with Rule 17a-5 under the Securities Exchange Act of 1934. In our opinion the

PricewaterhouseCoopers LLP, 45 South Seventh Street, Suite 3400, Minneapolis1 MN 55402 T: (612) 596 6000, www.pwc.com/us

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supplemental information is fairly stated, in all material respects, in relation to the financial statements as a whole.

February 25, 2022

We have served as the Company's auditor since 2010.

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# RiverSourceDistributors, Inc. Statement of Financial Condition December 31, 2021 Confidential Treatment Requested (in thousands except share amounts)

| Assets                                           |           |
|--------------------------------------------------|-----------|
| Cash and cash equivalents                        | \$ 27,067 |
| Receivables:                                     |           |
| Due fi-om affiliates                             | 78,108    |
| Other                                            | 35        |
| Deferred income taxes, net                       | 2,026     |
| Other assets                                     | 593       |
| Total assets                                     | \$107,829 |
| Liabilities and Stockholder's Equity             |           |
| Liabilities:                                     |           |
| Payables:                                        |           |
| Due to affiliates                                | \$ 73,888 |
| Accrued salaries and employee benefits           | 6,999     |
| Due to third party distributors                  | 4,305     |
| Other liabilities and accrued expense            | 5,127     |
| Total liabilities                                | 90,319    |
| Commitments and contingencies (see note 8)       |           |
| Stockholder's equity:                            |           |
| Comrrxm stock \$.01 par value per share:         |           |
| Authorized, issued and outstanding shares - I 00 |           |
| Additional paid-in capital                       | 22,761    |
| Accumulated deficit                              | (5,251)   |
| Total stockholder's equity                       | 17,510    |
| Total liabilities and stockholder's equity       | \$107,829 |

*The accompanying notes are an integ<sup>r</sup> al partofrhesefinancial sratemenls.* 

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# RiverSourceDistributors, Inc. Statement of Operations YearendedDecember31, 2021 Confidential Treatment Requested (in thousands)

| Revenues:                                     |               |
|-----------------------------------------------|---------------|
| Distribution fees from affiliates             | \$ 524,502    |
| Service fees from affiliates                  | 41.544        |
| Interest income                               | 32            |
| Total revenues                                | 566,078       |
| Expenses:                                     |               |
| Distribution expense:                         |               |
| Aftiliates                                    | 505,928       |
| Third party distribution                      | 18,574        |
| Employee compensation and benefits            | 35,851        |
| Service fees charged by Parent and affiliates | 2,196         |
| Other employee related costs                  | 1.968         |
| Advertising and promotion                     | 321           |
| Other                                         | 6,148         |
| Total expenses                                | 570,986       |
| Loss before income taxes                      | (4,908)       |
| Income tax benefit                            | (401)         |
| et loss                                       | �4,507)<br>\$ |

*The accompanying notes are an integral part of these financial statements.* 

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# RiverSourceDistributors, Inc. Statement of Changes in Stockholder's Equity Year ended December 31, 2021 Confidential Treatment Requested (in thousands except share amounts)

|                                  | Shares<br>Outstanding | Common<br>Stock | Additional<br>Paid-In<br>Capital | Accumulated<br>Deficit | Total<br>Stockholder's<br>Equity |
|----------------------------------|-----------------------|-----------------|----------------------------------|------------------------|----------------------------------|
| Balance at January I , 2021      | 100                   | \$              | \$ 19,761                        | \$<br>(744)            | \$<br>19,017                     |
| et loss                          |                       |                 |                                  | (4,507)                | (4,507)                          |
| Capital Contribution from Parent |                       |                 | 3,000                            |                        | 3,000                            |
| Balance at December 31, 2021     | 100                   | \$              | \$ 22,761                        | \$ �s,2s I l           | \$<br>17,510                     |

*The acco mpanying notes are an integ<sup>r</sup> al partofthesefinancia/ statements.* 

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# RiverSourceDistributors, Inc. Statement of Cash Flows YearendedDecember31, 2021 Confidential Treatment Requested (in thousands)

| Cash flows from operating activities                  |               |
|-------------------------------------------------------|---------------|
| Net loss                                              | \$<br>(4,507) |
| Adjustments to reconcile net loss to net cash used by |               |
| operating activities:                                 |               |
| Deferred income tax                                   | 52            |
| Changes in operating assets and liabilities:          |               |
| Receivables:                                          |               |
| Due from affiliates                                   | (10,174)      |
| Other receivables                                     | (23)          |
| Other assets                                          | 30            |
| Payables                                              |               |
| Due to affiliates                                     | 9,409         |
| Accrued salaries and employee benefits                | 318           |
| Due to third party distributors                       | 273           |
| Other liabilities and accrued expense                 | 5 104         |
| Net cash provided by operating activities:            | \$<br>482     |
| Cash flows from financing activities                  |               |
| Capital contribution from Parent                      | 3,000         |
| Net cash provided by financing activities             | \$<br>3,000   |
| et decrease in cash and cash equivalents              | 3,482         |
| Cash and cash equivalents at beginning of year        | 23,585        |
| Cash and cash equivalents at end of year              | \$<br>27,067  |
| Suppleniental disclosure:                             |               |
| Income taxes received from Parent                     | \$<br>107     |
| income taxes paid to state tax jurisdictions          | \$<br>(19)    |

*The accompanying notes are an integral pan of these financial statements.* 

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# RiverSourceDistributors, Inc. Notes to Financial Statements Confidential Treatment Requested (in thousands)

## **I. Orga nir.a tion and Significant Accounting Policies**

## **Organization**

RiverSource Distnbutors, Inc. (the Company) is incorporated under the laws of the state of Dela ware. The Company is a wholly owned subsidiary of Ameriprise Financial, Inc. {the Parent). The Company is a limited purpose brokerdealer registered with the Securities and Exchange Commission (SEC) and is a member of the Financial I ndusoy Regulatory Authority, Inc. {FINRA)and the Securities Investor Protection Corporation (SI PC), and the various states in which the Company transacts.

The Company provides underw riting and distribution services for financial products of affiliated companies, RiverSource Life Insurance Company and RiverSource Life Insurance Co. of New York, which offer varnbe insurance and annuity products.

## **Ba sis of Financial Statement Presentation**

The preparation of the financial statements in con fonnity with accounting principles generally accepted in the Unied States (U.S. GAAP) requires management to make estimates and assumptions that a !Ted the reported amounts of assets and liabilit ies, disclosure of contingent assets and liabilities. and the reported amounts of revenues and expenses. These accounting estimates reflect the best judgment of management and actual a mounts could differ significantly from those estimates.

## **Signi flea nt Accounting Policies**

*Revenue recognition:* Refer to Note 3 for Revenue from Contracts with Customers.

Interest income primarily includes interest income on cash and cash equivalents. I nteresl income is accrued usngthe effective interest m ethod, which makes an adjustment to the yield for security premiums and discounts on all performing fixed maturity securities.

*Distribution expenses:* Distribution expenses include compensation paid to third party distributors and affiliates. The majority of these costs correlate directly with the level of sales and are recognized when incurred.

*Employee compensation and benefits:* Employee compensation and benefits expense includes compensation, share based awards and other benefits for employees. The Company participates in the Parent's Ameriprise Finance I Incentive Compensation Pian (the Incentive Compensation Plan). Employees and directors a re eligible to receive incentive a wards including stock options, restricted stock awards, restricted stock units, perfomiance shares and sim ilara wards designed to comply with the applicable federal regulations and laws ofjurisdiction . These expenses, which are based on the grant-date fairva lue of the awards,a re included in the employee compensation and benefts line in the statements ofoperations. The tax impact of differences between the amount expensed within the finance I statements and the amount deducted for tax purposes, which is gen erally the fair valueas oft he vesting date or exerci'le date, resu Its in a tax adjustment reflected in the statement ofoperations.

*Service fees charged by Parent and affiliates:* The Company is allocated expenses from the Parent and affiliates for technology, occupancy and other administrative costs which are included in service fees charged by Parent and affiliates in the statemento f operations and a re recognized when incurred.

*Other employee related costs:* Employee related costs for the year ended December 31, 2021, included travel, sacs tra iningand promotion,communication, and miscellaneous costs and are recognized when incurred.

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# RiverSourceDistributors, Inc. Notes to Financial Statements Confidential Treatment Requested (in thousands)

*Income taxes:* The Company's provision for income taxes represents the netamountofincometaxes thatthe Company expects to pay orto receive from various taxingjurisdictions in connection with its operations. The Company provoes for income taxes based on a mounts that the Company believes it will ultimately owe taking into account the recognition and measurement foruncertain tax positions. Inherent in the provision for income taxes areestinates and judgments regarding thetax treatment ofcertain items. The Company's taxable income is included in theconsoloated federal and state income tax returns oft he Parent. The Company provides for income taxes on a separate return basis, except that, under an agreement between the Parent and the Company, tax benefits are recognized for losses to the extentthey can be used in the consolidated return. It is the policy of the Parentto reimburse its subsidiaries for any tax benefits recorded.

In connection with the provision for income taxes, the financial statements reflect certain amounts related to deferred tax assets and liabilities, which result from temporary differences between the assets and liabilities measured for financial statement purposes versus the assets and liabilities measured for tax return purposes.

*Fair value of financial instruments:* Substantially a lithe Company's financial assets and liabilities are carried at far value or at a mounts which, because of their short-tenn nature and based on market interest rates available to the Company at December 3 I, 2021, approximate fair value.

*Cash and cash equivalents:* Cash equivalents include commercial paper with original or remaining maturities at the tim eofpurchase of90 days or less. The Company has evaluated the cash equivalents for credit risk and hasdetennned it is negligible due to the short term nature ofthe investment.

## **2. Recent Accounting Pronouncements**

## **Adoption of New Accounting Standards**

## *Income Taxes-Simplifying the Accounting/or Income Taxes*

In December 2019, the Financial Accounting Standards Board (''FASB")updatedtheaccounting standardsto simplify the accounting for income taxes. Theupdateelim inates certain exceptions to: (I) accounting principles related to intraperiod tax allocation to be applied on a prospective basis, (2)deferred tax liabilities related to outside basis differences to be a pp lied on a modified retrospective basis through a cwnulative-effect adjustment to retained earnings as of the beginning oftheperiod ofadoption, and (3)year-to-date losses in interim periods to be applied on a prospective basis. The update also amends existingguidance related to situations when an entity receives: (I) a step-up in the tax basis of goodwill to be applied on a prospective basis, (2) an allocation of income tax expense when members of a consolidated tax filing group issue separate financial statements to be applied on a retrospective basis for a LI pen:x:1s presented, (3) interim recognition of enactment of tax la wsorrate changes to be applied on a prospective basis, and (4) franchise taxes and other taxes partially based on income to be applied on a retrospective basis for a U perbds presented or a modified retrospective basis through a cumulative-effect adjustment to retained earnings as of the beginning of the period ofadoption. The standard is effective for interim and annual periods beginning after December l 5,2020, with early adoption permitted. The Company adoptedthestandard on January I, 2021. The adoption of this standard had no impact on the Company's consolidated results of operations and financial condition.

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## RiverSource Distributors, Inc. Notes to Financial Statements Confidential Treatment Requested (in thousands)

### 3. Revenue **from** contr11cts with customers

The following table presents revenue from contracts with customers and a reconciliation to revenues reported on the sta1ement of opera1ions:

| Distribution Fees fiom affiliates           |               |
|---------------------------------------------|---------------|
| Annuilies and insurance                     | \$<br>524.502 |
| Service fees from affiliates                | 41,544        |
| Total revenue from contracts with customers | 566.046       |
| Investment income                           | 32            |
| Total revenues                              | \$<br>566.078 |

The following discussion describes the nature, timing. and uncertainty of revenues and cash nows arising from the Company·s contracts with customers.

#### *A111111ities and i11s11ra11ce*

The Company earns revenue f<sup>r</sup> om selling atliliated variable annuity and insurance products from insurance company affiliates (RiverSource Life and RiverSource Life of New York). The performance obligation is satisfied at the time of each individual sale A portion of the revenue (time of sale revenue) is based on a fixed rate applied. as a percentage. to the amounts invested at the time of sale. These are recognized daily and collected weekly. The remaining revenue (trail revenue) is recognized over the time the client owns the investment or holds the contract and is generally based on a fixed rate applied. as a percentage, to the value of the insurance policy or annuity contract. The ongoing revenue is not recognized ar rhe 1ime of sale because ir is variably constrained due to factors outside the company's control including market volatility and client behavior (such as how long the client holds the insurance policy or annuity contract). The revenue will not be recognized until it is probable that a significant reversal will not occur. These trail revenues primarily relate to sales in a prior period. The trail fees are recognized monthly and collected quanerly.

#### *Sen•ice fees from a/filiates*

The Company earns revenue tor performing distribution support services for insurance company attiliates. �uppon services include providing wholesaling services and maintaining the distribution network. These performance obligations are considered a series of distinct services that are substantially the same and are satisfied each day over the contract tem1. These fees are invoiced and collected monthly.

#### *Rece11:ahfet*

Receivables from contracts wirh customers are recognized when the performance obligation is satisfied, and the Company has the unconditional right to recognize the revenue. Receivables related to revenues f<sup>r</sup> om contracts with customers were \$72, **135** as of December **31, 2021.** 

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## RiverSource Distributors, Inc. Notes to Financial Statements Confidential Treatment Requested (in thousands)

#### **4. Income Taxes**

**The components of the income tax provision on income for the year ended Decemher JI, 2021 consis1 of:** 

|                                   |    | 2021   |
|-----------------------------------|----|--------|
| Current income tax benefit:       |    |        |
| Federal                           | \$ | (J8J)  |
| State and local                   |    | Q.0}   |
| Total current income tax benefit  |    | {4532  |
| Deterred income tax expense       |    |        |
| Federal                           |    | 42     |
| State and local                   |    | 10     |
| Total deferred income tax expense |    | 52     |
| Total income tax benefit          | s  | t�0 I� |

**The Company had a payable to the Parent for federal income taxes of S218 and for state income taxes of S39 at December JI, 2021, which were both included in 11ue to affiliates on the statement of financial condition.** 

The **principal reasons that the aggregate income tax provision is different from that computed hy using the** L' .S. **federal corporate tax rate of 21 % are as fol lows:** 

| 2021   |                      |
|--------|----------------------|
| 21 0 % |                      |
|        |                      |
|        |                      |
|        |                      |
| 8.2 %  |                      |
| "'     | 8.2<br>(21.4)<br>0.4 |

**Significant components of the Company's deferred income tax assels and liahilitie�** a� **of Decemher 31. 2021 are** as **follows:** 

|                                       |    | 2021  |  |
|---------------------------------------|----|-------|--|
| Deferred income tax assets:           |    |       |  |
| Deferred compensation                 | \$ | 1.965 |  |
| Other                                 |    | 62    |  |
| Total deferred income tax assets      |    | 2,027 |  |
| Deferred income tax liabilities:      |    |       |  |
| Other                                 |    | l!J   |  |
| Total deferred income tax liabilities |    | ill   |  |
| 'et deferred income tax asset         | s  | 2�026 |  |

**In the opinion of management, it is more likely than not that the Company will realize the benefit of the deferred income tax assels, and therefore, no such valuation allowance has been established as of December 31. 2021.** 

{14}------------------------------------------------

## RiverSource Distributors, Inc. Notes to Financial Statements Confidential Treatment Requested (in thousands)

For all open tax years and all major taxingjurisdictions, management oflhe Company has concluded that there are no significant uncertain tax positions that would require recognition in the financial statements. Furthermore. management of the Company is also not aware of any tax positions for which it is reasonably possible that the total amounts of unrecognized tax benefits will significantly change in the next twelve months. The Company has no unrecognized tax benefits or related interest and penalties for the year ended December 31, 2021.

The Company files income tax returns. as part of its inclusion in the consolidated federal income tax return of Ameriprise Financial (the Parent), in the U.S. federal jurisdiction and various state \_jurisdictions. The federal statute oflim itations are closed on years through 2015, except for one issue for 2014 and 2015 which was claimed on amended returns. The IRS is currently auditing the Parent's US. income tax returns for 2016 through 2020. Ameriprise Financial's or its subsidiaries·. including the Company's, state income tax returns are currently under examination by various jurisdictions for years ranging from 2015 through 2019.

#### !§, **Fair Values** of **Assets and** Liabilities

U.S. GAAP defines fair value as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction *between* market participants at the measurement date: that is. an exit price. The exit price assumes the asset or liability is not exchanged subject to a forced liquidation or distressed sale.

#### **Valuation Hierarchy**

The Company categorizes its fair value measurements according to a three-level hierarchy. The hierarchy prioritizes the inputs used by the Company's valuation techniques. A level is assigned to each fair value measurement based on the lowest level input that is significant to the fair value measurement in its entirety. The three levels of the fair value hierarchy are defined as follows.

- Level I Unadjusted quoted prices for identical assets or liabilities in active markets that are accessible at the measurement date.
- Level 2 Prices or valuations based on observable inputs other than quoted prices in active markets for identical assets and liabilities.
- Leve13 Prices or valuations that require inputs that are both significant to the fair value measurement and unobservable.

#### **Determination** of **Fair Value**

The Company uses valuation techniques consistent with the market and income approaches to measure lhe fair value of its assets and liabilities. The Company's market approach uses prices and other relevant information generated by market transactions involving identical or comparable assets or liabilities. The Company's income approach uses valuation techniques to convert future projected cash flows to a single discounted present value amount. When applying either approach, the Company maximizes the use of observable inputs and minimizes the use of unobservable inputs.

The following is a description of the valuation techniques used to measure fair value and the general classification of these instrument pursuant to the fair value hierarchy.

{15}------------------------------------------------

## Ri verSource Distributors, Inc. Notes to Financial Statements Confidential Treatment Requested (in thousands)

### *Cash eq11i1•alents*

The Company's cash equivalents, consisting of commercial paper, are classified as Level 2 and are measured at amortized cost, which approximates fair value because of the short time bttwc:c:n the purchase of the instrument and its expected realization.

When available, the fair value of securities is based on quoted prices in active markets. If quoted prices are not available, fair values are obtained from third party pricing services, non-binding broker quotes, or other model-based valuation techniques.

The following table presents balances of assets and liabilities measured at fair value on a recurring basis:

|                           | Ol-ccmbcr 31. 2121 |  |            |        |          |  |        |        |
|---------------------------|--------------------|--|------------|--------|----------|--|--------|--------|
|                           | Level I            |  | __ Level 2 |        | Levl!I 3 |  | 'lotal |        |
| Assets                    |                    |  |            |        |          |  |        |        |
| Cash equivalents          |                    |  |            |        |          |  |        |        |
| Comrrcrcial paper         | s                  |  | s          | 26,999 | s        |  | \$     | 26,999 |
| Tool assets at fair value |                    |  | s          | 26.999 | s        |  | s      | 26.999 |

During the reporting period, therl! were no assets or liabilities measured at fair value that were Level 3 and there were no assets or liabilities measured at fair value on a nonrecurring basis. There were no transfers between levels.

#### **Fair Value of Financial Instruments**

In general, the Company's financial assets and liabilities are carried at fair value or at amounts which, because of their short-term nature and based on market interest rates available to the Company at December 31, 2021, approximate fair value.

#### **6. Net Capital pro"isions and regulatory requirements**

As a registered broker dealer. the Company is subject to the SEC's unifonn net capital rule (Rule I 5c3- I ).The Company computes its net capital requirements under the alternative method provided for in Rule I 5c3- I. which requires the Company to maintain net capital equal to 2% of combined aggregate customer-related debit items, as defined (or \$250. if greater)

At December 31, 2021, the Company had net capital of SI 0.085 which was \$9,835 in excess of the amount required to be maintained. Advances to affiliates, dividend payments and other equity withdrawals are subject to certain notification and other provisions of the net capital rule of the SEC and other regulatory bodies

The Company claims exemption from Rule l 5c3-3 of the Securities and Exchange Commission under paragraph **(k)(** I) of that rule.

#### **,. Related-Party Transactions**

The amounts of revenue earned from af<sup>f</sup> iliates may not be renective of revenues that could have been earned on similar levels of activity with unrelated third parties Similarly, the expenses allocated to the Company may not be reflective of expenses that would have been incurred by the Company on a stand-alone basis Revenues received from affiliates are described in Note 3

{16}------------------------------------------------

## RiverSourceDistributors, Inc. Notes to Financial Statements Confidential Treatment Requested (in thousands)

The Company provides various services to other a ff�iates and is compensated for these services pursuant to varous agreements with the affiliates to which the services are provided. The most significant activity includes providing distribution and undetWriting services for affiliated insurance and annuity products sold through an affiliated fekl force a od outside distributors.

The Company recorded \$505,928 in distribution expense to Ameriprise Financial Services, Inc., an affiliate, for the year ended December 31, 2021, which included concessions on variable insurance and annuity products.

The Company is a !located expenses from the Pa rent and affiliates for technology, occupancy and other administrative costs which totaled\$2, 196 for the year ended December3 l ,202 I and are reflected in service fees charged by Parent and affiliates in the statementof operations.

Receivables due from affiliates on the statement of financial condition as ofDecember3 I, 2021 primarily relates to uncollected distribution fees of\$72, 135.

Payables due to affiliates on the statement of financial condition as of December 31, 2021, primarily relates to distribution fees of\$67,830.

The Company participates in the Parent's Retirement Plan (the Plan) which covers all permanent employees age 21 and over who have met certainemployment requirements. However, effective April 2020, the Parent no Ion� enrolled new employees in the Plan. Contributions tot he Plan are based on participants' age,years ofserviceand total compensation for the year. Funding of retirement costs for the Pian complies with the applicable minimum fundng requirements specified by the Employee Retirement Income Security Act. The Company's share of the total net periodic pension costwas\$1, 107for the year ended December3 I, 2021 and is included in the employee compensafun and benefits in the statemento foperations.

The Company also participates in the defined contribution pension plans of the Parent that cover a II employees who have met certain employment requirements. The Company's contributions totheplans are a percentage of either each employee's eligible compensation or basic contributions. Costs of the� plans allocated to the Company were \$1,061 for the year ended December 31, 2021 and is included in the em ployeecompensation and benefits in the statement of operations.

The Company participates in the Pa rent's Incentive Compensation Pian. Employees are eligible to receive incentive a wards including stock options, restricted stock a W<lrds (RSAs), non-qualified options, restricted stock units (RS Us), deferred share units, perfonnance shares and similar awards designed to comply with the applicable federal regukl.funs and laws ofjurisdiction. The Company pays various employee benefit plan expenses to the Parent including expenses associated with RSAs, RS Us, stock options and deferred compensation p !ans, based on thevalueofthe awards issued to the Company's employees. For the year ended December 3 I, 2021 , the expenses paid by the Company for the Incentive Compensation Plan were \$1 ,007. These amounts are included in employee compensation and benefits i, the statement of operations.

#### **8. Commitments and Contingencies**

In the normal course of business, the Company may indemnify and guarantee certain service providers aganst potential losses in connection with their acting asserviceproviders to theCompany . The maximum potent0l amount of future payments the Company could be required to make under these indemnifications cannot be estinated, however, the Company believes that it is unlikely it will have to make materia I payments under these arrangements and has not recorded a contingent liability in the financial statements for any indemnifications.

{17}------------------------------------------------

# RiverSourceDistributors, Inc. Notes to Financial Statements Confidential Treatment Requested (in thousands)

The Company is involved in the nonnal course of business in legal proceedings which include regulatory inquiries, arbitration and Litigation. These include proceedings specific to the Company as well as proceedings generally applicable to business practices in the industry in which it operates. These legal proceedings are subject to uncertainties and, as such, it is inherently difficult to detennine whether any loss is probable or even rea&inably possible, or to reasonably estimate the amount of any potential loss. In accordance with applicable accountilg standards, the Company estab lisbes an accrued liability for contingent litigation and regulatory matters when those matters present loss contingencies that a re both probable and can be reasonably estimated. As of December 31,2021, the Company is engaged in one such matter and, while the Company believes it has meritorious defense and is appropriately accrued in Other liabilities and accrued ex pen�, the ultimate resolution of the matter could resut i, a loss in excess of the amount accrued.

### **9. SubsequentEvents**

As of February 25, 2022, which is the date the financial statements were available to be issued, the Company has evaluated events or transactions that may have occurred after the statement of financial condition date for potent:el recognition or disclosure. No events ortra nsactions were identified requiring further recognition ordisclosure.

{18}------------------------------------------------

Supplemental In formation

As of December 31, 2021

{19}------------------------------------------------

## RiverSource Distributors, Inc. Computation of Net Capital pursuant to SEA Rule l 5c3-l December 31, 2021 Confidential Treatment Requested (in thousands)

| Stockholder's equity                                             | \$<br>17,510 |
|------------------------------------------------------------------|--------------|
| Deduct:                                                          |              |
| on-allowable assets and operational deductions:                  |              |
| Due from affiliates                                              | 4,771        |
| Deferred income taxes. net                                       | 2,026        |
| Other receivables and other assets                               | 628          |
| Total deductions                                                 | 7,425        |
| Net capital before haircut                                       | \$<br>10,085 |
| Haircut on securities computed pursuant to SEA Rule l 5c3• 1:    |              |
| et capital                                                       | \$<br>10,085 |
| Capital requirement of broker/dealer electing alternative method | 250          |
| Excess net capital                                               | \$<br>9,835  |

There are no m aterial differences between the amounts presented above and the amounts presented in the Company's December3 1, 2021, unaudited FOCUS Part II A Report as filed on January26,2022.

{20}------------------------------------------------

# RiverSourceDistributors, Inc. Information for Determi nation ofReserve Requirements pursuantto SEA Rule l 5c3-3 December 31, 2021 Confidential Treatment Requested

The Company claims exemption from SEA Rule J 5c3-3 oftheSecuritiesandExchange Commission underpara�ph (kXl )of that rule.

{21}------------------------------------------------

## RiverSource Distributors, Inc. 's Exemption Report Confidential Treatment Requested

RiverSource Distributors, Inc. (the "Company") is a registered broker-dealer subject to Rule l 7a-5 promulgated by the Securities and Exchange Commission ( 17 C.F.R. §240. I 7a-5, "Reports to be made by certain brokers and dealers''). This Exemption Report was prepared as required by 17 C.F.R. *§* 240. 17a-5(d)(I) and (4). To the best of its knowledge and belief, the Company states the following:

- (I) The Company claimed an exemption from 17 C.F.R. *§* 240. I 5c3-3(k)( I) under the following provisions of 17 C.F.R.§ 240.15c3-3(k)(I).
- (2) The Company met the identified exemption provision in 17 C.F .R. § 240.1 Sc3-3(k)(1) throughout the year ended December 3 I, 2021 without exception.

RiverSource Distributors, Inc.

I, Michael S. Mattox, swear (or affirm) that, to my best knowledge and belief, this Exemption Report is true and correct.

By

February 25, 2022

{22}------------------------------------------------

![](_page_22_Picture_0.jpeg)

## **Report of Independent Registered Public Accounting Firm**

To Management and the Board of Directors of RiverSource Distributors, Inc.

We have reviewed RiverSource Distributors, Inc.'s assertions, included in the accompanying RiverSource Distributors, Inc. Exemption Report, in which (1) the Company identified 17 C.F.R. § 240.15c3-3(k)(1) as the provision under which the Company claimed an exemption from 17 C.F.R. § 240.15c3-3 (the "exemption provision") and (2) the Company stated that it met the identified exemption provision throughout the year ended December 31, 2021 without exception. The Company's management is responsible for the assertions and for compliance with the identified exemption provision throughout the year ended December 31, 2021.

Our review was conducted in accordance with the standards of the Public Company Accounting Oversight Board (United States) and, accordingly, included inquiries and other required procedures to obtain evidence about the Company's compliance with the exemption provision. A review is substantially less in scope than an examination, the objective of which is the expression of an opinion on management's assertions. Accordingly, we do not express such an opinion.

Based on our review, we are not aware of any material modifications that should be made to management's assertions referred to above for them to be fairly stated, in all material respects, based on the provisions set forth in paragraph (k)(1) of 17 C.F.R. § 240.15c3-3.

February 25, 2022

PricewaterhouseCoopers LLP, 45 South Seventh Street, Suite 3400, Minneapolis, MN 55402 T: (612) 596 6000, www.pwc.com/us


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