Voya to Pay $3.6 Million to Settle SEC Charges
March 9, 2018 by Aisha Al-Muslim
The Securities and Exchange Commission said Thursday that two subsidiaries of Voya Financial Inc. agreed to pay $3.6 million to settle charges that they failed to disclose conflicts of interest and misled mutual-fund investors.
The SEC said Voya Investments LLC and Directed Services LLC acted as investment advisers to certain mutual funds, offered to customers through insurance companies affiliated with the advisers. To generate additional income for the mutual funds and their investors, the Voya advisers lent securities held by those funds to third parties.
“The Voya advisers recalled loaned securities before their dividend record dates so that the advisers’ insurance company affiliates…could receive a tax benefit based on the dividends received,” the SEC said. But that caused the funds and their investors to lose securities lending income without receiving any offsetting tax benefit, according to the SEC’s order. The advisers failed to disclose the conflict of interest to the funds’ board or in the funds’ prospectuses, the SEC said.
More than $2 million of the settlement will go to the affected mutual funds, according to the SEC.
‘’These funds and those investing in them weren’t told that they were losing income so that the Voya advisers could provide a tax benefit to their affiliates,” said Anthony Kelly, co-chief of the SEC enforcement division’s asset-management unit. “Now money will be heading back to the funds to help investors.”
The Voya advisers neither admitted nor denied the findings, the SEC said.
“We are pleased to have reached this settlement,” Voya spokesman Chris Breslin said in an emailed statement late Thursday. The “announcement means we avoid a lengthy and costly litigation process and can focus our resources on delivering high-quality investment service to our clients.”
New York-based Voya Financial is a retirement, investment and insurance company.
Write to Aisha Al-Muslim at aisha.al-muslim@wsj.com
