Two investment advisers agreed to pay $3.6 million in order to settle SEC charges for failing to disclose a conflict of interest related to securities lending.
The SEC alleged that two subsidiaries of Voya Holdings Inc. (hereafter, "Voya Advisers"), recalled portfolio securities of mutual funds in a manner that would create a tax benefit for affiliated insurance companies.
According to the SEC, the recall allowed the Voya Advisers' insurance affiliates, which were shareholders of the affected parties' funds, to take dividend-received deductions. The SEC contends that the Voya Advisers were aware that the recall would benefit its insurance affiliates but failed to notify the affected investors of the conflict of interest.
The SEC charged the Voya Advisers with violating Advisers Act Sections 206(2) and 206(4) and Rule 206(4)-8. The Voya Advisers agreed to pay $3.6 million to settle the charges, and to cease and desist any further alleged violations. More than $2 million will go to the affected mutual funds.
No admissions were made in connection with the settlement.
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