SEC reaches $3.6 million settlement with Voya over securities lending

SEC reaches $3.6 million settlement with Voya over securities lending
Voya wrongly recalled securities it had loaned out to mutual fund clients early in order to give a tax benefit to its insurance affiliates.
MAR 08, 2018
The Securities and Exchange Commission on Thursday announced a $3.6 million settlement with investment adviser subsidiaries of Voya Holdings Inc. for a securities lending practice that harmed mutual fund investors. In its order, the SEC alleged that between August 2003 and March 2017, Voya Advisers recalled, in advance of the dividend record date, portfolio securities it had loaned out to mutual funds. Recalling the securities early allowed Voya's insurance affiliates, who were the record shareholders of the fund shares, to take a tax benefit. But the mutual funds and those invested in them through variable life annuity contracts and variable life insurance policies "lost securities lending income during the period when the securities were recalled," the order states. The SEC said that Voya failed to disclose the conflict of interest created by the recall. More than $2 million of the settlement will go to the harmed mutual funds . "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," Anthony S. Kelly, co-chief of the SEC Enforcement Division's Asset Management Unit, said in a statement. "Now money will be heading back to the funds to help investors. Investment advisers must not place the interests of their affiliates over those of clients, depriving them of information necessary to make informed investment decisions." In a statement, Voya said, "We are pleased to have reached this settlement. This announcement means we avoid a lengthy and costly litigation process and can focus our resources on delivering high-quality investment service to our clients."

Latest News

Federal judge dismisses Eltek manipulation lawsuit against Morgan Stanley Smith Barney
Federal judge dismisses Eltek manipulation lawsuit against Morgan Stanley Smith Barney

Nine-month electronic trading freeze and share lending program at the center of dismissed claim.

RIA wrap: Dynamic strikes South Carolina deal to reach $7B AUM milestone
RIA wrap: Dynamic strikes South Carolina deal to reach $7B AUM milestone

Meanwhile, Rossby Financial's leadership buildout rolls on with a new COO appointment as Balefire Wealth welcomes a distinguished retirement specialist to its national network.

Rethinking diversification amid a concentrated S&P 500
Rethinking diversification amid a concentrated S&P 500

With a smaller group of companies driving stock market performance, advisors must work more intentionally to manage concentration risks within client portfolios.

Merrill pays second settlement to former Miami Dolphins player, client of ex-broker
Merrill pays second settlement to former Miami Dolphins player, client of ex-broker

Professional athletes are often targets of scam artists and are particularly vulnerable to fraud.

Schwab touts AI as its biggest growth lever at investor day
Schwab touts AI as its biggest growth lever at investor day

The brokerage giant tells Wall Street it will use artificial intelligence to reach clients it has never been able to serve — and turn the technology's perceived threat into a competitive edge.

SPONSORED Beyond wealth management: Why the future of advice is becoming more human

As technical expertise becomes increasingly commoditized, advisors who can integrate strategy, relationships, and specialized expertise into a cohesive client experience will define the next era of wealth management

SPONSORED Durability over scale: What actually defines a great advisory firm

Growth may get the headlines, but in my experience, longevity is earned through structure, culture, and discipline