WASHINGTON (Reuters) - The U.S. Securities and Exchange Commission said on Thursday that two investment adviser subsidiaries of Voya Financial Inc (VOYA.N) agreed to pay about $3.6 million to settle charges that it failed to disclose conflicts of interest and made misleading disclosures.
The SEC announced the charges at the same time as announcing the settlement.
According to the SEC, the subsidiary companies served as investment advisers to certain mutual funds offered through insurance companies, while also lending securities held by those funds.
The advisers recalled the loaned securities before their dividend record dates so the insurance company affiliates could receive tax benefits. Doing so caused the funds and their investors to lose securities-lending income without receiving any of the tax benefit, the SEC said.
The advisers did not disclose the conflict of interest to the funds’ board of directors or in the funds’ prospectuses, the SEC said.
The advisers neither admitted nor denied the findings, the SEC said.
“We are pleased to have reached this settlement,” Voya spokesman Chris Breslin said in a statement. “Today’s announcement means we avoid a lengthy and costly litigation process and can focus our resources on delivering high-quality investment service to our clients.”
Under the amount to be paid under the agreement, about $2 million will go directly to the affected mutual funds, the SEC said.
Voya manages 401(k) plans for Reuters.
Reporting by Makini Brice; Editing by Jonathan Oatis and Leslie Adler