The board of ING Partners Inc., Hartford, says it is removing Janus Capital funds from ING variable product subaccount investment menus.[@@]

The announcement follows a July 29 statement from Janus Capital Group, Denver, warning that a client intends to redeem about $5 billion by year-end. No funds have been withdrawn yet, according to a Janus spokesman.

ING is a unit of ING Groep N.V., Amsterdam.

ING says concerns about Janus include “changes in fund managers, performance and well-publicized investigations, claims and regulatory actions and the corresponding negative publicity,” ING says in a report filed with the SEC.

The ING filing also cites ING’s interest in standardizing its fund offerings and an effort to cut costs by reducing the number of funds offered in ING variable products.

Janus funds that are being substituted include Janus Aspen Balanced Portfolio, Janus Aspen Mid Cap Growth Portfolio and Janus Aspen Worldwide Growth Portfolio. Both institutional and service shares are affected.

Funds that will be substituted include ING UBS U.S. Allocation Portfolio (to be renamed ING Van Kampen Equity and Income Portfolio); ING Alger Aggressive Growth Portfolio (to be renamed ING T. Rowe Price Diversified Mid Cap Growth Portfolio); and ING MFS Global Growth Portfolio (to be renamed the ING Oppenheimer Global Portfolio).

The new subadvisors are American Century Investment Management Inc., Oppenheimer Funds Inc. and T. Rowe Price Associates Inc.

In related news, Janus announced today that it has reached a final settlement with the U.S. Securities and Exchange Commission and state regulators in Colorado and New York. The settlement involves frequent-trading allegations.

Janus says the terms of the settlement are similar to those described in the past. The settlement will establish a pool of $100 million to compensate investors who were hurt by frequent trading and other practices. Of that amount, $50 million is in the form of a civil penalty. In addition, Janus says it will make $1.2 million in other settlement-related payments required by Colorado. The company also has agreed to reduce its management fees by about $25 million per year for the next 5 years.

In announcing the final settlement, Janus says it implemented several new measures, including enhancing portfolio valuation techniques to discourage market timing; eliminating the use of “third-party soft dollars,” or the use of brokerage commissions to purchase research and services; implementing a 2% redemption fee on shares of certain funds liquidated within 90 days of purchase; and increasing portfolio holdings disclosure to monthly from semi-annually. Janus also is appointing an independent chairman.