The Securities and Exchange Commission announced on Monday that Voya Financial Advisors, Inc. (Voya) has agreed to settle charges for “its disclosure failures and misleading statements to clients regarding investment advice it gave about mutual funds, illiquid alternative investments and cash sweep vehicles.”
Without admitting or denying the findings, Voya accepted the terms, which includes a distribution of money to harmed clients of the retail advisory firm and Voya’s retention of an independent compliance consultant.
According to the SEC, at times from January 2013 to December 2018, Voya engaged in practices that the SEC said violated its fiduciary duty to its advisory clients. Among other things, the order finds that Voya:
- made misleading statements and provided inadequate disclosures regarding its receipt of 12b-1 fees from client investments.
- purchased or recommended certain cash sweep money market funds for advisory clients for which it received undisclosed revenue-sharing payments. As a result, Voya’s advisory clients generally received lower performance and paid higher fees than they otherwise would have.
- caused some advisory clients to pay higher fees, in the form of upfront commissions, when purchasing illiquid alternative investment products when those same investments were available with the upfront commissions waived.
- provided misleading comparisons to clients when it recommended that clients move from money market funds to a bank sweep product.
SEC findings
The SEC’s order finds that Voya violated antifraud provisions and the compliance rule of the Investment Advisers Act of 1940.
Voya will disgorge $11,547,820 plus prejudgment interest of $2,371,335 and will pay a civil penalty of $9,000,000.
Voya has agreed to a cease-and-desist order, to be censured, and to comply with certain undertakings, including that it retain an independent compliance consultant and return funds to affected investors.
With more than 20 years serving financial markets, John Sullivan is the former editor-in-chief of Investment Advisor magazine and retirement editor of ThinkAdvisor.com. Sullivan is also the former editor of Boomer Market Advisor and Bank Advisor magazines, and has a background in the insurance and investment industries in addition to his journalism roots.
