ING to cough up $5.2 million in Labor Department settlement

Insurer failed to disclose investment gains related to late trades

Feb 4, 2013 @ 4:15 pm

By Darla Mercado

DOL, settlement, disclosure, ING, retirement
+ Zoom

The Labor Department has ordered ING Life Insurance and Annuity Co. to pay $5.2 million to 1,400 retirement plan clients for failure to disclose the company's practice of holding onto any investment gains that resulted from transactions that weren't processed in a timely manner.

The firm also will shell out a $524,508.73 civil penalty and will be required to disclose its policy to plan clients.

The $5.2 million reimbursement payment represents the net gains that the company retained between 2008 and 2011, according to the Labor Department.

The DOL asserted that ING has kept the gains that resulted when the company didn't process transactions as of the retirement plan's contract date.

On the day of the trade, if the share value were different from the contract date, ING kept any increases in value but made the plans whole for any losses, according to the Labor Department. The company also kept gains resulting from reprocessing erroneous transactions, the DOL said.

This procedure wasn't disclosed to plan clients, according to the department.

ING now will have to disclose the policy to current and prospective plan clients in writing. It will acknowledge that the gains it retained count as additional compensation to be reported in accordance with the Labor Department's 408(b)(2) regulation, which went into effect last July and mandates enhanced fee disclosure to plan sponsors.

Joe Loparco, a spokesman for ING, noted that the company's policy was spelled out to plan sponsors under the 408(b)(2) fee disclosures last summer and was recently shared with them again as part of a sponsored mailing.

“We are pleased to have resolved this matter with the Department of Labor in a way that benefits our client plans, participants and various stakeholders,” he said. “Our longstanding policy has been to put customers in the position they would have been in had a processing error never occurred.”

0
Comments

What do you think?

View comments

Recommended for you

Featured video

INTV

How advisers are helping clients battle the opioid crisis

Editor Fred Gabriel, contributing editor Elizabeth MacBride and reporter Greg Iacurci discuss the financial impact of the opioid epidemic on American families, and how advisers can help.

Latest news & opinion

Fidelity wins arb case against wine mogul but earns a rebuke from Finra

In the case of investor Peter Deutsch, Fidelity doesn't have to pay any compensation, but regulator said firm put its interests ahead of his.

Plaintiffs win in Tibble vs. Edison 401(k) fee case

After a decade of activity around the lawsuit, including a hearing before the U.S. Supreme Court, judge rules a prudent fiduciary would have invested in institutional shares.

Advisers get more breathing room to make Form ADV changes

RIAs can enter '0' in some new parts of the document before their annual filing next year.

Since banking scandal, Wells Fargo advisers with more than $19.2 billion leave firm

Despite a trying year, the firm has said it will sweeten signing bonuses for veteran advisers.

Is LPL's deal sweet enough for NPH's 3,200 reps and advisers?

They will have to decide if the signing package they are being offered by LPL makes sense. A lot is hanging in the balance.

X

Subscribe and Save 60%

Premium Access
Print + Digital

Learn more
Subscribe to Print