Our asset management business is subject to substantial and increasing regulatory compliance and oversight. The recent financial  crisis and various high profile financial scandals have resulted in active debate regarding the appropriate level of regulation and  oversight of asset management businesses in a number of jurisdictions in which we operate. The introduction of new legislation  and increased regulation may result in increased compliance costs and could materially affect the manner in which we conduct  our business and adversely affect our profitability. The advisers of our private investment funds are registered as investment advisers with the U.S. Securities and Exchange  Commission (the “SEC”). Registered investment advisers are subject to the requirements and regulations of the Investment  Advisers Act of 1940 (the “Advisers Act”), including, but not limited to, fiduciary duties to clients, maintaining an effective  compliance program, record-keeping, advertising and operating requirements, disclosure obligations, general anti-fraud  prohibitions and “pay to play” practices vis-à-vis U.S. state and local government entities. These requirements and regulations are  primarily intended to benefit investment advisory clients and investment company shareholders and generally grant supervisory  agencies broad administrative powers, including the power to limit or restrict the carrying on of business for failure to comply  with such laws and regulations. In the event that such powers are exercised, the possible sanctions that may be imposed include  the suspension of individual employees, limitations on the activities in which the investment adviser may engage, suspension  or revocation of the investment adviser’s registration as an adviser, censure and fines. Compliance with these requirements and  regulations results in the expenditure of costs and internal resources, and a failure to comply with such obligations could result  in investigations, financial or other sanctions, and reputational damage. The Investment Company Act of 1940 (the “40 Act”) and the rules promulgated thereunder (and similar legislation in other  jurisdictions) provide certain protections to investors and impose certain restrictions on companies that are registered as  investment companies. Among other things, such rules limit or prohibit transactions with affiliates, impose limitations on the  issuance of debt and equity securities and impose certain governance requirements. The 40 Act requires the registration of any  company which holds itself out to the public as being engaged primarily in the business of investing, reinvesting or trading in  securities. In addition, the 40 Act also requires the registration of an entity that is engaged or proposes to engage in the business  of investing, reinvesting, owning, holding or trading in securities and which owns or proposes to acquire investment securities  with a value of more than 40% of such entity’s assets on an unconsolidated basis. We are not currently nor do we intend to  become registered as an investment company under the 40 Act. In order to ensure that we are not deemed to be an investment  company, we may be required to materially restrict or limit the scope of our operations or plans, we will be limited in the types  of acquisitions that we may make and we may need to modify our organizational structure or dispose of assets that we would not  otherwise dispose of. If we were required to register as an investment company under the 40 Act, we would, among other things,  be restricted from engaging in certain business activities (or have conditions placed on our business activities), issuing certain  securities and be required to limit the amount of investments that we make as a principal or otherwise conduct our business in a  manner that does not subject us to the registration and other requirements of the 40 Act. We are from time to time subject to various governmental investigations, audits and inquiries, both formal and informal  (“investigations”). These investigations, regardless of their outcome, could be costly, divert management attention, and damage  our reputation. The unfavourable resolution of such investigations could result in criminal liability, fines, penalties or other  monetary or non-monetary remedies and could materially affect our business or results of operations. There is an increasing global focus on the implementation and enforcement of anti-bribery and corruption legislation, and  this focus has heightened the risks that we face in this area, particularly as we expand our operations globally. We are subject  to a number of laws and regulations governing payments and contributions to public officials or other third parties, including  restrictions imposed by the U.S. Foreign Corrupt Practices Act and similar laws in non-U.S. jurisdictions, such as the UK Bribery  Act and the Canadian Corruption of Foreign Public Officials Act. Different laws that are applicable to us may contain conflicting  provisions, making our compliance more difficult. The policies and procedures we have implemented to protect against non- compliance with anti-bribery and corruption legislation may be inadequate. If we fail to comply with these laws and regulations,  we could be exposed to claims for damages, financial penalties, reputational harm, incarceration of our employees, restrictions  on our operations and other liabilities, which could negatively affect our operating results and financial condition. In addition, we  may be subject to successor liability for violations under these laws or other acts of bribery committed by companies in which  we or our funds invest. Instances of bribery, fraud, accounting irregularities and other improper, illegal or corrupt practices can be difficult to detect, and  fraud and other deceptive practices can be widespread in certain jurisdictions. We invest in emerging market countries that may  not have established stringent anti-bribery and corruption laws and regulations, or where existing laws and regulations may not  be consistently enforced. For example, we invest in jurisdictions that are perceived to have materially higher levels of corruption  according to international rating standards, such as China, India, Latin America and the Middle East. Due diligence on investment  opportunities in these jurisdictions is frequently more challenging because consistent and uniform commercial practices in such  locations may not have developed or do not meet international standards. Bribery, fraud, accounting irregularities and corrupt  practices can be especially difficult to detect in such locations. 62 BROOKFIELD ASSET MANAGEMENT  Governmental Investigations; Anti-Bribery and Corruption