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COMMITMENTS AND CONTINGENCIES
 9 Months Ended
Sep. 30, 2021
Commitments and Contingencies Disclosure [Abstract]  
COMMITMENTS AND CONTINGENCIES COMMITMENTS AND CONTINGENCIES
Commitments and contingencies may arise in the ordinary course of business.

The company has committed to co-invest in certain investment products, which may be called in future periods. At September 30, 2021, the company’s undrawn co-invest capital commitments were $457.5 million (December 31, 2020: $453.5 million).

Certain of our managed investment products have entered into revolving credit facilities with financial institutions. Pursuant to these arrangements, the company provided equity commitments and guarantees to certain of these investment products that are temporary in nature. The revolving credit facilities look first to the respective investment products for repayment and servicing. The company’s equity commitment or guarantee would only be called in the event a particular investment product is unable to meet its obligation. The company believes the likelihood of being required to fund its equity commitments or guarantees under these arrangements to be remote. To date, the company has not been required to fund any equity commitments under these arrangements. The maximum amount of future payments under the commitments is $115 million and under the guarantees is $30 million. The fair value of the guarantee liability is not significant to the consolidated financial statements.

The Parent and various company subsidiaries have entered into agreements with financial institutions to guarantee certain obligations of other company subsidiaries. The company would be required to perform under these guarantees in the event of certain defaults. The company has not had prior claims or losses pursuant to these contracts and expects the risk of loss to be remote.

Pursuant to an agreement entered into at the consummation of the acquisition of OppenheimerFunds, MassMutual, as the holder of seed capital investments in certain funds and accounts included in the acquisition, has the right to redeem its seed capital investments in accordance with an agreed upon schedule. In the event MassMutual exercises its redemption rights and the applicable fund or account is unable to meet such redemption (for example, due to illiquid investments or the need to maintain a level of investment in the fund), the company would be required to fund such redemption to MassMutual and seek reimbursement from the applicable fund or account at a later time when the fund or account is able to fulfill a redemption request. At September 30, 2021, the total amount of remaining seed capital subject to this agreement is approximately $53.6 million. Since December 31, 2020, MassMutual exercised its redemption rights and redeemed a portion of the seed capital per the agreed upon schedule. The company does not anticipate having to fund any material seed capital redemptions subject to this agreement.

Legal Contingencies

The company is from time to time involved in pending or threatened litigation relating to claims arising in the ordinary course of its business. The nature and progression of litigation can make it difficult to predict the impact a particular lawsuit or claim will have on the company. There are many reasons that the company cannot make these assessments, including, among others, one or more of the following: the proceeding is in its early stages (or merely threatened); the damages sought are unspecified, unsupportable, unexplained or uncertain; the claimant is seeking relief other than compensatory damages; the matter presents novel legal claims or other meaningful legal uncertainties; discovery has not started or is not complete; there are significant facts in dispute; and there are other parties who may share in any ultimate liability.

In assessing the impact that a legal or regulatory matter will have on the company, management evaluates the need for an accrual on a case-by-case basis. If the likelihood of a loss is deemed probable and is reasonably estimable, the estimated loss is accrued. If the likelihood of a loss is assessed as less than probable, or an amount or range of loss cannot be reasonably estimated, a loss is not accrued. In management’s opinion, adequate accrual has been made as of September 30, 2021 to provide for any such losses that may arise from matters for which the company could reasonably estimate an amount. Management is of the opinion that the ultimate resolution of such claims will not materially affect the company’s business, financial position, results of operation or liquidity. Furthermore, in management’s opinion, it is not possible to estimate a range of reasonably possible losses with respect to other litigation contingencies.

The investment management industry also is subject to extensive levels of ongoing regulatory oversight and examination. In the United States, United Kingdom and other jurisdictions in which the company operates, governmental authorities regularly make inquiries, hold investigations and administer market conduct examinations with respect to the company’s compliance with applicable laws and regulations. Additional lawsuits or regulatory enforcement actions arising out of these inquiries may in the future be filed against the company and related entities and individuals in the United States, United Kingdom and other jurisdictions in which the company and its affiliates operate. Any material loss of investor and/or client confidence as a result of
such inquiries and/or litigation could result in a significant decline in AUM, which would have an adverse effect on the company’s future financial results and its ability to grow its business.

OppenheimerFunds acquisition-related matter

As previously disclosed by the company, in the fourth quarter of 2019, the company identified an accounting matter which required a restatement of the historical financial statements for the following funds: (1) the Invesco Steelpath MLP Income Fund; (2) the Invesco Steelpath MLP Select 40 Fund; (3) the Invesco Steelpath MLP Alpha Fund; and (4) the Invesco Steelpath MLP Alpha Plus Fund (each a Fund and together the Funds).

Remediation payments will be made to certain shareholders of the Funds negatively impacted by the restatement described above. Remediating these matters has, will or may produce the following costs:

•Costs of processing the restated historical financial statements, and related costs of communicating with present and former Fund shareholders;
•Costs of reimbursing shareholders for transactions in Fund shares made at incorrect NAVs; and
•Certain additional costs in connection with these matters.

The company expects to bear all or at least some portion of these and other remediation costs. Uncertainties remain as of the date of this report regarding the degree to which the company will ultimately be financially responsible for bearing such costs. The sources of such uncertainties include, among other things, the following:

•The company and/or the Funds may be entitled to seek reimbursement for a portion of such costs under applicable insurance policies (subject to the terms of such policies, including applicable deductibles and policy limits).
•The company acquired sponsorship and management of the Funds as part of its acquisition of OppenheimerFunds. The company may be entitled to seek indemnification for certain of such costs from MassMutual under the OppenheimerFunds acquisition agreement (subject to the terms of such indemnification, including the specified deductible and limit).

The company has substantially completed the process of obtaining fund shareholder information from certain omnibus accounts. Based on this information, we have reduced our estimated liability to $254.3 million (year ended December 31, 2020: $387.8 million), which resulted in a benefit to transaction, integration and restructuring expense of $45.7 million and $131.1 million during the three and nine months ended September 30, 2021, respectively. The estimated liability excludes any amounts that may be recovered through indemnification and insurance recoveries, as well as other remediation costs related to the matter, such as legal and consulting costs, or the costs of communicating with fund shareholders.

The original estimate was based primarily on assumptions around the activity of the underlying fund shareholders in the omnibus accounts. Our analysis of the patterns of actual underlying fund shareholder activity has resulted in a decrease to the estimated liability during the three months ended September 30, 2021. We expect fund shareholder reimbursement payments to be made in the fourth quarter of 2021.

The measurement period for this acquisition closed during the three months ended June 30, 2020; therefore, the adjustments made during the nine months ended September 30, 2021 as well as any further adjustments to the estimate, including any recoveries from insurance or indemnification, are and will be recorded through earnings in transaction, integration and restructuring expense. Remediation costs of $0.9 million and $4.2 million, respectively, have been incurred during the three and nine months ended September 30, 2021 (year ended December 31, 2020: $11.6 million) and recorded as transaction, integration and restructuring expense.