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Advisory Firm Settles Fraud Charges, Agrees to Repay Harmed Clients

Dec. 21, 2020

File No. 3-20183

December 21, 2020 - The Securities and Exchange Commission today announced 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. The settlement 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's order, at times from January 2013 to December 2018, Voya engaged in practices that 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.

The SEC's order finds that Voya violated antifraud provisions and the compliance rule of the Investment Advisers Act of 1940. Without admitting or denying the findings, 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.

The SEC's investigation was conducted by Alfred Tierney, Ronnie Lasky, and Gary Leung of the Asset Management Unit. John Farinacci, an industry expert in the Asset Management Unit, and Anthony McNeal, Becky Howell, and Michael Mastromonica of the Fort Worth Regional Office assisted with the investigation.

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