Voya gives investors back $2 million under SEC order

Action concludes settlement in case of improper stock-loan revenue actions

Aug 2, 2018 @ 3:52 pm

By InvestmentNews

The Securities and Exchange Commission has terminated a disgorgement fund set up by Voya Investments to reimburse investors in certain Voya mutual funds.

The SEC said Voya distributed the entire $2,024,355.48 it had agreed to pay to 36 of its mutual funds to compensate them for not passing along income from stock-lending transactions that should have gone to the funds' investors.

In an administrative proceeding, the SEC said that from at least Aug. 20, 2003, until March 6, 2017, "Voya failed to disclose in the 36 funds' prospectuses a practice of recalling securities that were out on loan in advance of dividend record dates, enabling the firm's insurance affiliates to take a tax deduction and depriving the funds and holders of the annuity contracts and life insurance policies of securities-lending income."

In a March 8, 2018 order, the SEC required Voya to disgorge $2,635,490.25, and to pay $511,978.89 in prejudgment interest and $500,000 in civil penalties. Of the $3,647,469.14 total, the SEC directed payment of $1,623,113.66 — consisting of the ordered civil penalties, prejudgment interest and a portion of disgorgement — to the United States Treasury.

The SEC also ordered Voya, at its own cost, to distribute the remaining $2,024,355.48 to each fund that had its securities recalled from June 14, 2011 to the present.

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