Voya Investments Sanctioned for improper stock-loan revenue actions
According to the Securities and Exchange Commission, the regulator has terminated a disgorgement fund set up by Voya Investments to reimburse investors in certain Voya Investments mutual funds. Voya reportedly distributed the entire $2,024,355.48 it had agreed to pay to 36 of its mutual funds to compensate them for not passing along income from stock-lending transactions that should have gone to the funds’ investors.
The SEC said in an administrative proceeding, that during the period of August 20, 2003, until March 6, 2017, “Voya failed to disclose in the 36 funds’ prospectuses a practice of recalling securities that were out on loan in advance of dividend record dates, enabling the firm’s insurance affiliates to take a tax deduction and depriving the funds and holders of the annuity contracts and life insurance policies of securities-lending income.”
In a March 8, 2018 order, the SEC required the firm to disgorge $2,635,490.25, and to pay $511,978.89 in prejudgment interest and $500,000 in civil penalties.
The SEC reportedly directed payment of $1,623,113.66 — consisting of the ordered civil penalties, prejudgment interest and a portion of disgorgement — to the United States Treasury.
The SEC also ordered Voya, at its own cost, to distribute the remaining $2,024,355.48 to each fund that had its securities recalled from June 14, 2011 to the present.
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