Voya Wins ‘Extraordinary Cooperation’ Credit in Fund Fee Resolution
Voya Financial has agreed to repay certain retirement plan and charitable organization customers almost $126,000 and to accept a regulatory censure for failing to apply mutual fund sales charge waivers available to them, but received no fines because of its “extraordinary cooperation” in resolving the issue, the Financial Industry Regulatory Authority said on Tuesday.
Voya began a review of its approximately 2,310 advisors’ application of the waivers in late 2015, according to a letter of acceptance, waiver and consent in which it agreed to a censure and an operational plan for following up on its remediation efforts.
Voya, which has about 1,210 branches, not only reported its review results to Finra in May 2016 ahead of the sweep, but expanded the regulator’s follow-up request for a five-year “lookback” at fund sale charges to seven years beginning with January 2009, the consent letter said.
The self-initiated review began before Finra issued an industrywide “targeted examination letter” on mutual fund waivers in mid-2016 that has led to six- and seven-figure fines and related sanctions for large and small firms.
Voya’s settlement of $125,982 that will be returned to customers includes $56,065 that resulted from its voluntary expansion of the review period. The fee waivers result from Class A share purchases in certain mutual funds that eliminate front-end sales charges for eligible customers—and to Class B or C shares that do the same with back-end charges and higher ongoing fees.
Finra cited six elements of “the extraordinary cooperation of Voya” that helped determine the settlement.
In addition to the self-initiated review and extended lookback period, the firm promptly established a plan of remediation, promptly self-reported to Finra, promptly took action and remedial steps to correct the violative conduct and revised its procedures to avoid recurrence of the misconduct “prior to detection or intervention by a regulator,” the letter said.
Finra issued guidance in 2008 on credit that member firms can receive for extraordinary cooperation. A spokeswoman for the regulator did not immediately respond to a query on how often the credit has been applied in the intervening years.