Voya Hit with $22.9 Million Fine by SEC

From the Desk of Jim Eccleston at Eccleston Law LLC:

Voya Financial Advisors has agreed to pay $22.9 million to settle charges brought by the U.S. Securities and Exchange Commission (“SEC”) alleging failures to disclose conflicts of interest and making misleading statements to clients. The settlement was announced by the SEC on December 21, 2020.

The SEC’s allegations, made against Voya’s investment advisory division, address conduct that occurred between January 2013 and December 2018. The SEC alleged that Voya made misleading statements and provided inadequate disclosures relating to the firm’s receipt of 12b-1 fees receiving from client investments. The SEC also found that Voya gave misleading comparisons to clients when making recommendations that clients transfer funds from money market funds to a bank sweep product.

The SEC found that Voya’s misconduct caused its advisory clients to incur addition fees. According to the SEC, Voya received undisclosed revenue-sharing payments on money market funds sold to advisory clients, which resulted in Voya clients paying higher fees and receiving lower investment performance. Additionally, the SEC found that Voya caused some advisory clients to incur upfront commissions on certain illiquid investments when those same investments could have been purchased without upfront commissions. 

According to the SEC, Voya’s conduct violated the firm’s fiduciary duty owed to its advisory clients. The $22.9 million Voya agreed to pay consists of $13.9 million in client restitution and a $9 million civil penalty. The restitution payment includes approximately $2.4 in prejudgment interest. Voya agreed to settle the charges without admitting or denying the SEC findings.

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