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Regulation and Compliance > Federal Regulation > SEC

Voya to Pay SEC Fine of $22.9M

By Jeff Berman

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Picture of the SEC building (Photo: AP)

Voya Financial Advisors will pay a total of $22.9 million to settle charges that it allegedly failed to disclose 12b-1 fees charged to clients, according to a Securities and Exchange Commission order.

The firm also allegedly made misleading statements regarding investment advice it provided to clients about mutual funds, illiquid alternative investments and cash sweep vehicles, the SEC said Monday.

The firm’s violations of antifraud provisions and the compliance rule of the Investment Advisers Act of 1940 occurred from January 2013 until December 2018, the regulator claimed.

Voya also agreed to a cease-and-desist order, to be censured, and to comply with certain undertakings, including the retention of an independent compliance consultant and to return funds to affected investors, according to the SEC.

This development came on the heels of news that Transamerica Financial Advisors, another insurer-owned advisory firm like Voya, recently agreed to pay $8.8 million in restitution and fines to settle claims that it failed to provide adequate supervision of registered representatives in connection with the sale of variable annuities, mutual funds and 529 plans, according to the Financial Industry Regulatory Authority.

Without admitting or denying the findings, Voya will disgorge $11.5 million plus prejudgment interest of $2.4 million and will also pay a civil penalty of $9 million, the SEC said.

“Ensuring that our customers receive the appropriate products and services to help them meet their retirement needs is core to our focus as a company, Voya said in a comment provided to ThinkAdvisor Tuesday.

“Restitution (including interest) is being paid to our customers, and we have revised our procedures and disclosure to avoid a recurrence of this issue,” it added.

Voya is just the latest financial firm to be charged with 12b-1 fee violations by the SEC. For example, in August, hybrid RIA SCF Investment Advisors agreed to pay more than $767,000 to settle 12b-1 fee-related claims.

Also, the SEC last week filed a complaint against CapWealth Advisors, along with its principal officer and an advisor at the firm, over 12b-1 fees. But the Franklin, Tennessee-based RIA said it planned to fight the allegations in court.

In 2018, Voya agreed to pay $1 million to settle SEC charges for cybersecurity failures that allegedly led to a cyber intrusion that compromised thousands of clients’ personal information.

The firm allegedly violated Regulation S-P or the Safeguards Rule and the Identity Theft Red Flags Rule designed to protect confidential client data and protect them from the risk of identity theft, the SEC claimed at the time.

Jeff Berman

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