Defendant Name: Voya Investments, LLC

Defendant Type: Subsidiary of Public Company
Public Company Parent: Voya Financial, Inc.
SIC Code: 6311
CUSIP: 92908910

Document Reference: 34-82837

Document Details

Legal Case Name In the Matter of Voya Investments, LLC and Directed Services LLC
Document Name Order Instituting Administrative And Cease-And-Desist Proceedings, Pursuant To Section 15(b) of the Securities Exchange Act of 1934 and Sections 203(e) and 203(k) of the Investment Advisers Act of 1940, Making Findings, and Imposing Remedial Sanctions and a Cease-and-Desist Order
Document Date 08-Mar-2018
Document Format Administrative Proceeding
File Number 3-18393
Allegation Type Investment Advisers/Investment Companies
Document Summary According to the SEC: "[F]rom at least August 20, 2003 until March 6, 2017 ("Relevant Period"), the Voya Advisers engaged in the practice of recalling, in advance of the dividend record date, portfolio securities of mutual funds they advised, including the Funds, that were out on loan. This recall practice enabled the Insurance Affiliates, which were the record shareholders of the Funds' shares, to take a tax deduction known as the dividend received deduction ("DRD"). The recall practice resulted in an undisclosed conflict of interest. The Insurance Affiliates benefited from the DRD, while the Funds and individuals invested in those Funds through their variable life annuity contracts and variable life insurance policies -- known as "contract holders" -- lost securities lending income during the period when the securities were recalled. The Voya Advisers knew that recalling securities benefited the Insurance Affiliates but failed to identify and disclose the conflict of interest that arose from the recall practice to the Funds' board of directors ("Board"). In addition, the Voya Advisers failed to disclose in the Funds' prospectuses that their practice of recalling securities would benefit their affiliates while depriving the Funds and the affiliates' contract holders of income. This failure rendered the Funds' disclosures concerning securities lending materially misleading."

Disgorgement & Penalty Information

Resolutions
Cease and Desist Order
Censured
Cooperation Before the Resolution
Remedial Acts or Efforts Before the Resolution
Plan of Distribution
Monetary Penalties:

Disgorgement

Individual:     Shared:     $2,635,490.25
Shared with: Directed Services LLC

Civil Penalty

Individual:     Shared:     $500,000.00
Shared with: Directed Services LLC

Pre-Judgment Interest

Individual:     Shared:     $511,978.89
Shared with: Directed Services LLC

Total Penalty

Individual:     Shared:     $3,647,469.14
Shared with: Directed Services LLC

Related Documents:

2018-35 08-Mar-2018 Press Release--Administrative Proceeding
Voya Advisers Agree to Repay Clients and Settle Charges That They Failed to Disclose Securities Lending Conflict
On March 8, 2018, the SEC issued a press release noting that "[it] charged two investment adviser subsidiaries of Voya Holdings Inc. with failing to disclose conflicts of interest and making misleading disclosures in connection with their practice of recalling securities on loan so their affiliates could receive tax benefits."
34-83764 02-Aug-2018 Administrative Proceeding
Order Authorizing the Transfer to the U.S. Treasury of Any Funds Returned to the Disgorgement Fund in the Future and Terminating the Disgorgement Fund
The Commission stated that: "it is ORDERED that: A. Any funds returned to the Disgorgement Fund in the future shall be transferred to the U.S. Treasury; and B. The Disgorgement Fund is terminated."

Other Defendants in Action:

Directed Services, LLC