3-8-18 8:50 PM EST | Email Article

By Aisha Al-Muslim

Two subsidiaries accused of misleading customers

The Securities and Exchange Commission said Thursday that two subsidiaries of Voya Financial Inc. agreed to pay $3.6 million to settle charges that they failed to disclose conflicts of interest and misled mutual-fund investors.

The SEC said Voya Investments LLC and Directed Services LLC acted as investment advisers to certain mutual funds, offered to customers through insurance companies affiliated with the advisers. To generate additional income for the mutual funds and their investors, the Voya advisers lent securities held by those funds to third parties.

"The Voya advisers recalled loaned securities before their dividend record dates so that the advisers' insurance company affiliates...could receive a tax benefit based on the dividends received," the SEC said. But that caused the funds and their investors to lose securities lending income without receiving any offsetting tax benefit, according to the SEC's order. The advisers failed to disclose the conflict of interest to the funds' board or in the funds' prospectuses, the SEC said.

More than $2 million of the settlement will go to the affected mutual funds, according to the SEC. The Voya advisers neither admitted nor denied the findings, the SEC said.

An expanded version of this report appears on WSJ.com (https://www.wsj.com/articles/voya-to-pay-3-6-million-to-settle-sec-charges-1520556498?mod=mktw).

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-Aisha Al-Muslim ; 415-439-6400; AskNewswires@dowjones.com


(END) Dow Jones Newswires

03-08-18 2050ET

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