In the Matter of Aegon USA Investment Management, LLC, et al.
Admin. Proc. File No. 3-18681
In the Matter of Bradley J. Beman
Admin. Proc. File No. 3-18682
In the Matter of Kevin A. Giles
Admin. Proc. File No. 3-18683
On August 27, 2018, the Commission instituted and simultaneously settled administrative and cease-and-desist proceedings (“Order”) against Aegon USA Investment Management, LLC (“AUIM”), Transamerica Asset Management, Inc. (“TAM”), Transamerica Capital Inc., and Transamerica Financial Advisors, Inc. (“TFA”) (collectively, the “Respondents”). In the Order, the Commission found that, between July 2011 and June 2015, the Respondents violated securities laws while offering, selling, and managing quantitative-model-based mutual funds, variable life insurance investment portfolios, and variable annuity investment portfolios (collectively the “Products”) and separately managed account strategies (the “Strategies”) (collectively, the “Products and Strategies”). TAM and AUIM made false and misleading disclosures and omissions regarding (i) the risks and errors found in models for their Products and Strategies, (ii) the decision to stop using, running, or relying on at least one of these models, (iii) the calculation of dividends for one of their Products, (iv) the qualifications that the manager of certain products had, (v) the addition of volatility “guidelines” (“Guidelines”) that would impact certain portfolios’ asset allocations and exposure, and (vi) errors AUIM subsequently discovered in the Guidelines. In addition, TAM and AUIM did not take reasonable steps to check the accuracy of the Guidelines. Finally, TFA negligently relied upon and distributed misleading marketing materials to its advisory clients.
The Commission ordered the Respondents to pay a total of $97,602,040.00 in disgorgement, prejudgment interest, and civil monetary penalties. The Commission also created a Fair Fund, pursuant to Section 308(a) of the Sarbanes-Oxley Act of 2002, as amended, so the penalties, along with the disgorgement and prejudgment interest paid, as well as any penalties paid by Bradley J. Beman and Kevin A. Giles in the parallel proceedings, In the Matter of Bradley J. Beman, Admin. Proc. File No. 3-18682 and In the Matter of Kevin A. Giles, Admin. Proc. File No. 3-18683, can be distributed to investors harmed by the Respondents’ conduct described in the Order. The Commission ordered Beman and Giles to pay a $25,000.00 and $65,000.00 civil money penalty into the Fair Fund in their respective related proceedings. See the Beman Order: Release No. IA-4997 and the Giles Order: Release No. IA-4998.
The Order provides for the Respondents to deposit the Fair Fund into an escrow account, acceptable to the Commission staff. The Respondents are responsible for distributing the Fair Fund in accordance with the Order. Tax compliance and any related administrative expenses are the responsibility of the Respondent. The Order also requires that the Respondents submit to the Commission staff a final accounting and certification of the disposition of the Fair Fund within 150 days after Respondents complete the distribution to affected investors. See the Commission’s Order: Release No. 33-10539.
For more information, please contact the Commission:
Office of Distributions