Brokerage Firm Alert: Our Investment Fraud Attorneys Are Investigating Voya Financial Advisors, Inc.
Did You Lose Money Because of Voya Financial? Are You Aware of Complaints and Fines Against Voya Financial?
Updated on: December 14, 2023
Voya Financial Advisors, Inc. (“Voya Financial”) (CRD # 2882) is a broker-dealer and has been the subject of at least thirty-three (33) complaints filed by regulatory organizations like FINRA and many more by investors like yourself. At Patil Law, we have investigated Voya Financial, its regulatory complaints and fines, and its customer complaints. If you’ve invested your hard-earned money with Voya Financial, you should be very concerned about any regulatory actions, regulatory fines, or customer complaints against your brokerage firm.
Our team of attorneys specialize in representing investors with claims of fraud, negligence, and breach of fiduciary duty against this organization and its financial advisors. As an investor, you may be entitled to compensation for losses accrued due to mismanagement of your investments.
If you believe you have a claim against Voya Financial, you should strongly consider hiring an investment fraud lawyer and not wait until it’s too late to file a claim. Reach out to our legal team via the secure and private online form or call our firm directly toll-free at 1-800-950-6553 for a free consultation so that we can discuss your case and see what we can do to help you get the compensation you need and deserve. We do not charge anything for the ability to discuss your matter and evaluate your potential case.
Jump to Topic
Do I Have an Investment Fraud Case Against Voya Financial?
How To File a Claim Against Voya Financial To Get Your Money Back
Client Complaints – Is Your Financial Advisor on This List?
Did Misconduct By a Voya Financial Advisor Impact Your Investments? What Can You Do?
Voya Financial Has Many Regulatory Complaints and Fines
A Closer Look Into Voya Financial’s Regulatory Issues
Next Steps and Free Consultation with Our Legal Team
Do I Have an Investment Fraud Case Against Voya Financial?
✅ YES, if you’ve experienced financial losses due to the actions or misconduct of Voya Financial or its staff, you have the right to pursue legal action against them. You can sue Voya Financial but the odds are you signed away your right to sue in court and agreed to resolve your dispute in a FINRA arbitration proceeding.
FINRA arbitration proceedings are generally private proceedings that can last anywhere from a few months to approximately a year. Our attorneys have personal experience in representing clients in FINRA arbitration proceedings and know very well how you can not only sue Voya Financial in FINRA arbitration proceedings, but WIN that arbitration. The easiest way to know if you have a case against Voya Financial is to reach out to our legal team at Patil Law via the secure and private online form or call us toll-free at 1-800-950-6553 for a complimentary consultation.
Who is Voya Financial?
Voya Financial (CRD # 2882) is a registered broker-dealer. It operates as a full-service independent broker-dealer, providing a range of financial products and services to individual investors and financial advisors. As a registered broker-dealer, Voya Financial is subject to regulations and oversight by the Securities and Exchange Commission (SEC) and the Financial Industry Regulatory Authority (FINRA).
It is required to comply with industry standards and regulations to ensure the protection of its clients’ interests. A failure to comply with industry standards by either its brokers or the firm itself can result in disciplinary actions, fines, or other penalties imposed by regulatory authorities.
How To File A Claim Against Voya Financial To Get Your Money Back
If you have questions about Voya Financial, its advisors, or the management or performance of your accounts, please contact our legal team at Patil Law via the secure and private online form or call us toll-free at 1-800-950-6553 for a free and complimentary initial consultation. Our attorneys have experience handling well over a thousand securities arbitration claims, and our law firm has successfully recovered over $25 million for our clients to date.
We understand the stress that comes along with realizing that your financial advisor or brokerage firm has made poor decisions with your money. We can help you, as we have helped hundreds of other clients in the past.
Client Complaints – Is Your Financial Advisor on This List?
There have been scores of customer complaints filed against Voya Financial stockbrokers and investment advisors over the years. Many of these complaints deal with financial advisor misconduct, poor or unsuitable investment recommendations, failure by these brokerage firms to supervise their employees (the financial advisors), and general fraud against consumers. We have launched many investigations of current and former Voya Financial advisors:
- James Flynn currently barred (previously with Voya Financial Advisors and IFS Securities)
- David Wall currently unaffiliated (previously with Voya Financial Advisors and Capital Investment Group)
- Andrew Harris currently unaffiliated (previously with Voya Financial Advisors and Commonwealth Financial Network)
- James Knee currently barred (previously with Voya Financial Advisors and Ameriprise Financial Services)
- David Monckton with Ameriprise Financial Services (previously with Voya Financial Advisors and ING Financial Partners)
- Douglas Everett with Ameriprise Financial Services (previously with Voya Financial Advisors and Axa Advisors)
- Richard Casolari with Cetera Advisor Networks (previously with Voya Financial Advisors and Metlife Securities)
- James Zegers currently unaffiliated (previously with Voya Financial Advisors and LPL Financial)
- Aaron Gore with Ameriprise Financial Services (previously with Voya Financial Advisors and Edward Jones)
- Sean Sullivan currently unaffiliated (previously with Voya Financial Advisors and Arete Wealth Management)
- Ronald Metcalf Jr. with Voya Financial Advisors (previously with Cetera Advisor Networks and Cetera Investment Advisers)
- Ashley Woodard currently unaffiliated (previously with New York Life and Voya Financial Advisors)
- James Vandenburg currently unaffiliated (previously with Voya Financial Advisors and Cambridge Investment Research)
- Joseph Weiser with Voya Financial Advisors
- Pamela Lizanich currently unaffiliated (previously with IFS Securities and Voya Financial Advisors)
- Aaron Lavigne with Voya Financial Advisors (previously with Voya Financial Partners)
- Daniel Morris with Kovack Securities (previously with Voya Financial Advisors and Kovack Advisors)
- Michael Aschberger with Osaic Wealth (previously with Voya Financial Advisors and Oakbrook Financial Group)
- Justin Marcus with Cetera Advisor Networks (previously with Cetera Investment Advisers and Voya Financial Advisors)
- Larry Laio currently unaffiliated (previously with Voya Financial Advisors and Locust Street Securities)
- Ronald Menard with Cetera Advisor Networks (previously with Cetera Investment Advisers and Voya Financial Advisors)
- Richard Sall with LPL Financial (previously with Voya Financial Advisors and Amev Investors)
- Donald Schrock currently unaffiliated (previously with Voya Financial Advisors and Morgan Stanley DW)
- Lisa Reich-Scholtisek with Cetera Advisor Networks (previously with Cetera Investment Advisers and Voya Financial Advisors)
- Mark Chrisenberry with Ameriprise Financial Services (previously with Voya Financial Advisors)
- Akhil Kumar with Cadaret, Grant & Co. (previously with Cambridge Investment Research and Voya Financial Advisors)
- Donald Coffin with LPL Financial (previously with Voya Financial Advisors and Waddell & Reed)
- Edward Bacher with LPL Financial (previously with Voya Financial Advisors and ING Financial Advisers)
- Eric Gibbs with Fidelity Brokerage Services (previously with Strategic Advisers and Voya Financial Advisors)
- Francis Dougherty with Prudential Financial Planning Services (previously with Voya Financial Advisors and Pruco Securities)
- James Joly with Cambridge Investment Research (previously with Voya Financial Advisors and Cambridge Investment Research Advisors)
- Larry Kettle, Jr. with Cetera Advisor Networks (previously with Cetera Investment Advisers and Voya Financial Advisors)
- Mark Fisher, Jr. with currently unaffiliated (previously with Voya Financial Advisors and Princor Financial Services Corporation)
- Matthew Metzger with Cetera Advisor Networks (previously with Cetera Investment Advisers and Voya Financial Advisors)
- Nathan Lundquist currently unaffiliated (previously with Voya Financial Advisors and Primevest Financial Services)
- Peter Mersberger with LPL Financial (previously with Merit Financial Advisors and Voya Financial Advisors)
- Rajeswaran Venkatraman with Voya Financial Advisors (previously with ING Financial Advisers and Aetna Financial Services)
- Samuel Head with Ameriprise Financial Services (previously with Voya Financial Advisors and NYLIFE Securities)
- Sandy Dorson with Cetera Advisor Networks (previously with Cetera Investment Advisers and Voya Financial Advisors)
- William Johnson currently unaffiliated (previously with Cadaret, Grant & Co. and Voya Financial Advisors)
- Frank Chiodi, Jr. with Osaic Wealth (previously with Voya Financial Advisors and Waddell & Reed)
- Robert Witt currently barred (previously with Voya Financial Advisors and ING Financial Partners)
- Joyce An Thomas with Independent Financial Group (previously with Voya Financial Advisors and Legacy Financial Services)
- Peter Po with NI Advisors (previously with Voya Financial Advisors and Metlife Securities)
- Narongdej “Jay” Jaroensabphayanont currently barred (previously with Voya Financial Advisors and Intersecurities)
- Syauching “June” Hung with Independent Financial Group (previously with Voya Financial Advisors and Legacy Advisory Services)
- Ronan Gaudario currently unaffiliated (previously with Voya Financial Advisors and Merrill Lynch, Pierce, Fenner, & Smith Incorporated)
- Sierra Crocker currently barred (previously with Voya Financial Advisors)
- Brock Brady currently unaffiliated (previously with Cetera Advisor Networks and Voya Financial Advisors)
- Erik Alexander with Cetera Advisor Networks (previously with Cetera Investment Advisers and Voya Financial Advisors)
- Danny Young with Kovack Securities (previously with Cetera Advisor Networks and Voya Financial Advisors)
- Masood “Mike” Azad currently barred (previously with Voya Financial Advisors and NI Advisors)
- Fred Monroe, Jr. currently barred (previously with Voya Financial Advisors and Northwestern Mutual Investment Services)
- Martin Stancik currently barred (previously with Voya Financial Advisors and AXA Advisors)
- Jared Stines currently unaffiliated (previously with Cetera Investment Services and Voya Financial Partners)
- Thomas Brennan III with Cetera Advisor Networks (previously with Cetera Investment Advisers and Voya Financial Advisors)
Did Misconduct By a Voya Financial Advisor Impact Your Investments?
If you have lost money investing with any of these Voya Financial advisors or others within this brokerage firm, it’s important that you reach out to an investment loss attorney quickly because the statutes of limitations can bar your claims. Call our legal team at Patil Law toll-free at 1-800-950-6553 or reach out to us via the secure and private online form for a free initial consultation.
Voya Financial Has Many Regulatory Complaints and Fines
There have been approximately thirty-three (33) state and self-regulatory body disclosure events against Voya Financial; that is, final and formal proceedings initiated by a regulatory authority like the U.S. Securities and Exchange Commission (SEC) or self-regulatory body like the Financial Industry Regulatory Authority (FINRA) for a violation(s) of investment-related rules or regulations. In addition, there have been countless customer complaints filed against Voya Financial for misconduct by its securities sales and investment advisory representatives that are not reported by the firm on its Central Depository Record.
Our legal team at Patil Law has reported and written about these regulatory problems and customer complaints over many years. A few of the notable FINRA Sanctions for its Supervisory Failures are below.
A Closer Look Into Voya Financial’s Regulatory Issues.
Voya Financial has been repeatedly censured, warned, and fined for its own misconduct and failure to supervise its army of financial advisors. Details of thirty-three (33) regulatory issues are listed below:
Fined $22,919,155 for Alleged Supervisory Failures In Fulfilling Its Fiduciary Duties (Docket/Case Number: 3-20183)
Overview from FINRA’s Disciplinary Office:
The Securities and Exchange Commission deems it appropriate and in the public interest that public administrative and cease-and-desist proceedings be, and hereby are, instituted pursuant to section 15(B) of the securities exchange act of 1934 (Exchange Act) and sections 203(E) and 203(K) of the Investment Advisers Act of 1940 (Advisers Act) against Voya Financial Advisors, Inc. (“Voya” or “Respondent”)
The Commission finds that these proceedings arise from Voya’s breach of its fiduciary duties to its advisory clients in connection with: (a) Voya’s mutual fund share class selection practices and the financial benefits it received for advising clients to purchase and hold mutual fund share classes that paid fees pursuant to rule 12B-1 under the Investment Company Act of 1940 (“12B-1 Fees”); (b) Voya’s receipt of compensation in connection with certain client cash sweep accounts; and (c) Voya’s policy of requiring advisory clients to pay an upfront brokerage commission when purchasing illiquid alternative investment products (“Illiquid Alts”) when the same investment was available to advisory clients with the brokerage commissions waived.
First, at times during the period from January 13, 2013 through December 31, 2018 (The “relevant 12b-1 period”), Voya received 12b-1 fees, and in some instances avoided paying certain transaction fees, when it purchased, recommended, or held for advisory clients mutual fund share classes that charged 12b-1 fees when a lower-cost share class was available without providing adequate disclosure. Additionally, Voya provided disclosures: (a) that misstated the availability of lower-cost share classes for clients and Voya’s monitoring of those purchases; and (b) that Voya would rebate all 12B-1 fees to clients, which Voya did not consistently do.
Second, from January 13, 2013 through December 31, 2018 (The “relevant cash sweep period”), the unaffiliated clearing broker Voya used for client accounts (the “clearing broker”) paid Voya a portion of the revenue the clearing broker received from cash sweep products in which Voya invested advisory client assets. Voya did not disclose this revenue sharing arrangement of the related conflicts of interest to its advisory clients.
Third, from January 13, 2013 through July 28, 2017 (The “relevant illiquid alt period”), Voya caused certain advisory clients to pay higher fees, in the form of upfront commissions, when purchasing illiquid alt products when those same investments were available with commissions waived for advisory clients. Voya did not disclose this practice or the related conflicts of interest.
During each relevant period, Voya failed to adopt and implement written policies and procedures reasonably designed to prevent violations of the advisers act and the rules thereunder in connection with mutual fund share class selection, revenue sugaring, and illiquid alts.
As a result of the conduct described above, Voya willfully violated sections 206(2) and 206(4) of the advisers act and rule 206(4)-7 thereunder.
Fined $1,000,000 for Alleged Supervisory Failures In Protecting Customer Records and Information (Docket/Case Number: 3-18840)
Overview from FINRA’s Disciplinary Office:
Sec Admin release 34-84288; IA release 40-5048, September 26, 2018: the Securities and Exchange Commission (The “commission”) deems it appropriate and in the public interest that public administrative and cease-and-desist proceedings be instituted against Voya Financial Advisors. Inc. (“VFA” or “respondent”). The commission finds that these proceedings arise of out of VFA’s failure to adopt written policies and procedures reasonably designed to protect customer records and information, in violation of full 30(a) of Regulation S-P (the “Safeguards Rule”), and VFA’s failure to develop and implement a written identity theft prevention program as required by rule 201 of regulations S-ID (the “identity theft red flags rule”).
From at least 2013 through October 2017 (the relevant period), VFA gave its independent contractor representatives (“contractor representatives”) access to its brokerage customer and advisory client (hereinafter, “customer”) information through proprietary web portal. Through the portal, the contractor representative accessed the personally identifiable information (“PII”) of VFA customers and managed customers’ brokerage accounts. The portal was serviced and maintained by VFA’s parent company, Voya Financial, Inc. (Voya).
Over six days in April 2016, one or more persons impersonating VFA contractor representatives called VFA’s technical support line and requested a reset of three representatives’ passwords for the web portal used to access VFA customer information. In two instances using phone numbers Voya had previously identified as associated with prior fraudulent activity. Although VFA took certain steps to respond to the intrusion, those steps did not prevent the intruders from obtaining passwords and gaining access to VFA’s portal by impersonating two additional representatives for over the next several days. Nor did VFA terminate the intruders’ access to the three representatives’ accounts due to deficient cybersecurity controls and an erroneous understanding of the operation of the portal.
The intruders used the VFA contract representatives’ usernames and passwords to log in to the portal and gain access to PII for at least 5,600 of VFA’s customers, and subsequently to obtain account documents containing PII of at least one Voya customer. The intruders also used customer information to create new Voya.com customer profiles, which gave them access to PII and account information of two additional customers. There have been no known unauthorized transfers of funds or securities from VFA customer accounts as a result of the attack.
VFA violated the safeguards rule because its policies and procedures to protect customer information and to prevent and respond to cybersecurity incidents were not reasonably designed to meet these objectives. Among other things, VFA’s policies and procedures with respect to resetting VFA contractor representative’s passwords, terminating web sessions in its proprietary gateway system for VFA contractor representatives, identifying higher-risk representatives and customer accounts for additional security measures, and creation and alteration of Voya.com customer profiles, were not reasonably designed. In addition, a number of VFA’s cybersecurity policies and procedures were not reasonably designed to be applied to its contractor representatives.
Although VFA adopted a written identity theft prevention program in 2009, VFA violated the identity theft red flags rule because it did not review and update the identity theft prevention program in response to changes in risks to its customers or provide adequate training to its employees. In addition, the identity theft prevention program did not include reasonable policies and procedures to respond to identity theft red flags, such as those that were detected by VFA during the April 2016 intrusion.
Fined $100,000 for Alleged Supervisory Failures In Properly Monitoring Agents’ Activities Ensuring Compliance with Securities Laws (Docket/Case Number: CRF-18-8430-S)
Overview from FINRA’s Disciplinary Office:
Firm violated section 36B-31-6F of the regulations under the Connecticut Uniform Securities Act by failing to establish, enforce and maintain a system for supervising the activities of its agents that was reasonably designed to achieve compliance with applicable securities laws and regulations.
Fined $75,000 for Alleged Supervisory Failures in Registering Two Investment Adviser Representatives (Docket/Case Number: 2017-0033)
Overview from FINRA’s Disciplinary Office:
The Commonwealth of Massachusetts alleged failure to register two investment adviser representatives who had a place of business in Massachusetts and to ensure its investment adviser representatives were properly registered with the Commonwealth.
Fined $300,000 for Alleged Supervisory Failures in Disclosing Compensation From Third-Party Broker-Dealer, Raising Conflicts (Docket/Case Number: 3-17870)
Overview from FINRA’s Disciplinary Office:
Sec Admin release 34-80177; IA release 4661, March 8, 2017: The Securities and Exchange Commission (commission) deems it appropriate and in the public interest that public administrative and cease-and-desist proceedings be, and hereby are, instituted pursuant to section 15 (b) of the securities exchange act of 1934 (Exchange Act) and sections 203(k) of the Investment Advisers Act of 1940 (Advisers Act), against Voya Financial Advisors, Inc. (The Firm). This matter involves a registered investment adviser’s failure to disclose to its clients compensation it received through an arrangement with a third party broker-dealer (clearing broker) and conflicts arising from that compensation. In the arrangement, the clearing broker agreed to share with the firm certain revenues that the clearing broker received from the mutual funds in the clearing broker’s no-transaction-fee mutual fund program (NTF program). In a separate agreement, the clearing broker agreed to pay the firm a certain percentage of services fees that the clearing broker received from the mutual funds in exchange for the firm performing certain administrative services. These payments created a conflict of interest in that they provided a financial incentive for the firm to favor the mutual funds in the NTF program over other investments when giving investment advice to its advisory clients. The firm did not disclose this arrangement of the resulting conflict in its disclosures to its advisory clients, willfully violating sections 206(2) and 207 of the Advisers Act. In addition, by not adequately implementing policies and procedures reasonably designed to ensure proper disclosure of conflicts of interest, the firm willfully violated section 206(4) of the Advisers Act and Rule 206(4)-7 thereunder.
Fined $100,000 for Allegedly Casting Client Votes Without Permission (Docket/Case Number: E-2016-0020)
Overview from FINRA’s Disciplinary Office:
The division alleged that Voya Financial Advisors submitted unauthorized proxy votes on behalf of its clients.
Fined $400 for Alleged Supervisory Failures in Timely Reporting a Regulatory Action Taken By Finra
Overview from FINRA’s Disciplinary Office:
The Ohio Department of Insurance alleged that the firm violated Ohio revised code §3905.22(a) by failing to timely report a regulatory action, taken by FINRA on July 20, 2015, fining the firm $325,000 and ordering payment of restitution in the amount of $41, 856.20 (The “regulatory action”). By failing to report the regulatory action, the firm also violated Ohio revised code §3905.14(b) (1) by providing an incorrect answer on the firm’s license renewal paperwork. On August 21, 2015 the firm marked “No” when asked if it had been involved in an administrative action that had not been previously reported to the department. The firm admitted that the aforementioned allegations are true and accurate and that the statutes cited were violated. The firm paid a civil penalty of $400.00 and administrative costs of $100.00.
Fined $50,000 for Alleged Supervisory Failures (Docket/Case Number: 59516-S, 61129-S, 60875-S, 61531-S, 61993-S)
Overview from FINRA’s Disciplinary Office:
The Florida Office of Financial Regulation alleged that Voya Financial Advisors was in violation of rule 96W-600.013(1)(H)(1)., Florida Administrative Statutes, by violating NASD rule 3010(B)(1), by failing to enforce its written supervisory procedures in the supervision of variable annuity purchases. Without admitting or denying the findings, the firm consented to the described sanctions and to the entry of a final order. In the final order, the Florida Office of Financial Regulation stated that the firm’s trade review principals failed to request additional information to determine suitability for six (6) customer annuity purchases, failed to obtain full documentation of variable annuity purchases for four (4) customer files, and failed to adequately review surrender charges on twenty-two (22) annuity transactions, of which fourteen (14) were identified by the firm.
Fined $5,000 for Allegedly Reaching a Civil Penalty Agreement With Minnesota (Docket/Case Number: 23294)
Overview from FINRA’s Disciplinary Office:
The firm entered into a civil penalty agreement with Minnesota based on a consent order that the firm had entered with the New Jersey Bureau of Securities.
Fined $50,000 for Alleged Supervisory Failures in Supervising (Docket/Case Number: 2009-030)
Overview from FINRA’s Disciplinary Office:
Failure to Supervise. New Jersey Bureau of Securities (“Bureau”) alleges that the firm failed to follow its procedures, or that its procedures were inadequate, with respect to detecting prior undisclosed employment disciplinary issues, customer fund disbursement procedures, and trade review procedures.
Fined $3,000 for Alleged Supervisory Failures In Ensuring Representative Followed Firm Policies and Procedures (Docket/Case Number: CI09-265-DB)
Overview from FINRA’s Disciplinary Office:
Respondent failed to follow its written supervisory procedures ensuring their representative followed firm policies and procedures relating to correspondence logs and as such were not in compliance with the books and records requirements.
Fined $110,000 for Alleged Supervisory Failures in Supervising Pursuant to 8.E(1) of Illinois Securities Act of 1953 (Docket/Case Number: 0600566)
Overview from FINRA’s Disciplinary Office:
The Illinois Securities Department (“Department”) alleges that two former registered representative of ING Financial Partners, Inc. (“Firm”), Nevin Gillette and Richard Wells, procured funds from certain investors by telling such investors that they would invest in such funds in so called guaranteed investment contracts and other instruments (Gillette) and so called mutual bond trusts or other instruments (Wells), when in fact neither Gillette nor Wells made such investments but rather converted investors’ funds to their own use and benefit. The department also alleges the firm and its predecessor firm Locust Street Securities, Inc. did not engage in oversight that uncovered Gillette’s or Wells’ misconduct.
Fined $1,000 for Alleged Supervisory Failures In Filing Indiana Compliance Report on Time (Docket/Case Number: 08-0065 CA)
Overview from FINRA’s Disciplinary Office:
The Indiana Securities Division Alleges that the firm did not file an Indiana compliance report in a timely manner which is a violation of the Indiana Securities Act.
Fined for Alleged Supervisory Failures in Overseeing Securities Activities of Agents (Docket/Case Number: SEC-2008-00030)
Overview from FINRA’s Disciplinary Office:
Based on an investigation conducted by the Virginia Division of Securities and Retail Franchising (“Division”), it is alleged that during the year 1999 through August 15, 2001, Washington Square Securities, Inc. (Now known as ING Financial Partners Inc. (“firm”)) violated securities rule 21 VAC 5-20-260 B by failing to exercise diligent supervision over the securities activities of its former registered representative Scott Kramnic (CRD# 1959753) and agents of the Kramnick Agency.
Fined $500 for Alleged Supervisory Failures In Following The Rules For Reporting Requirements (Docket/Case Number: 07-062-I)
Overview from FINRA’s Disciplinary Office:
The Vermont Insurance Department Received Information that ING Financial Partners failed to establish procedures to comply with the reporting requirements of title 8, section 4813 O (a) of the Vermont Statutes with respect to reporting publicly available securities administrative actions to the insurance department.
Fined $75,000 for Alleged Security Fraud (Docket/Case Number: SD-07-0032, SD-07-0033)
Overview from FINRA’s Disciplinary Office:
With regard to ING, the Division alleged the following in its order to show cause and petition to suspend licensee and impose fines: Securities Fraud under section 61-1-1(2) of the Utah Uniform Securities Act (“Act”) by misrepresenting and omitting material facts; Securities Fraud under section 61-1-1 (3) of the Act by Engaging in an act, by practice or course of business which operated as a fraud by allowing retirement advisors to act as an unlicensed investment adviser; dishonest and unethical business practices under section 61-1-6(2) (g) of the Act by approving deceptive and misleading seminar invitations; and failure to supervise under sections 61-1-6(2) (g) and 61-1-6 (2) (j) of the act and rule 164-6-1G (C) (28) under the Utah Administrative Code.
Fined $100,000 for Alleged Supervisory Failures In Overseeing Registered Representative Who Commingled Bank Account With Personal and Client Transactions (Docket/Case Number: E-2006-0095)
Overview from FINRA’s Disciplinary Office:
Respondent ING Financial Partners, Inc. failed to properly supervise a registered representative who admitted to commingling a bank account with personal and client transactions. The registered representative received personal loans from brokerage clients which were purportedly invested but were rather used to pay gambling debts at casinos in Connecticut and Atlantic City.
Fined for Alleged Dishonesty to Customers (Docket/Case Number: S-04192)
Overview from FINRA’s Disciplinary Office:
Consent order of censure was issued because of an agent using dishonest and/or unethical business practices on a customer, or taking unfair advantage of a customer.
Fined $7,500 for Allegedly Signing Settlement Agreements With Customers That Limit Their Cooperation With The Self Regulatory Organization (Docket/Case Number: E102003160101)
Overview from FINRA’s Disciplinary Office:
NASD Conduct Rule 2110; settlement agreements executed by the firm, with various customers contained confidentiality clauses containing language that appeared to curtail the customers’ ability to cooperate with self regulatory organization.
Fined $200,000 for Alleged Supervisory Failures In Filing Documents On Time (Docket/Case Number: CAF040100)
Overview from FINRA’s Disciplinary Office:
Article V, Sections 2(c) and 3(b) of NASD’s by-laws, NASD rules 2110, 3010 – ING Financial Partners, Inc. filed at least 160 late amendments to forms U4 and U5, representing approximately 77% of the required amendments relating to reportable customer complaints, regulatory actions, and criminal disclosures. The firm’s supervisory system and procedures were not reasonably designed to achieve compliance with its article V reporting obligations.
Fined $50,000 for Allegedly Depriving Customers of The Benefit of Sales Charge Breakpoints (Docket/Case Number: C04040015)
Overview from FINRA’s Disciplinary Office:
NASD Rules 2110, 2310, 3010 – respondent member, acting through its agents effected, or caused to be effected, purchase of large positions of class B mutual fund shares in public customer accounts, depriving the customer of the benefit of sales charge breakpoints which they would have received had they purchased class A shares (including those acquired through letters of intent or rights of accumulation; deprived customers of lower 12b-1 fees that they would have received had the purchased class A shares while also exposing the customers to potentially higher contingent deferred sales charges upon liquidation; and, acting through individuals, failed to establish, maintain, and enforce a supervisory system reasonably designed to enable the firm and its supervisors to scrutinize class B share purchases with a view to detecting and preventing unsuitably large class B share purchases.
Fined $218,015.62 for Allegedly Employed Agents Who Sold Securities Away From The Firm (Docket/Case Number: SEC-2002-00037)
Overview from FINRA’s Disciplinary Office:
Employed agents who sold securities away from the firm. The agents sold investment contracts, and promissory notes. The firm failed to exercise diligent supervision over the securities activities of the agents.
Fined $5,000 for Allegedly Operating 13 Unregistered Branch Offices In Florida (Docket/Case Number: 2962-S-5/00)
Overview from FINRA’s Disciplinary Office:
Washington Square Securities, Inc. operated 13 branch offices in Florida without the benefit of registration since April 1, 2000 when they failed to renew.
Fined $5,250 for Alleged Supervisory Failures In Properly Overseeing The Securities Activities Of Its Agent In Virginia (Docket/Case Number: 41-0945505)
Overview from FINRA’s Disciplinary Office:
The applicant failed to exercise diligent supervision over the securities activities of one of its Virgina agents: the applicant failed to make and keep a current and complete record for each person who became a customer by not including the marital status of such customer in the records.
Fined $3,500 for Allegedly Operating In 2 Locations Without Registering Them As Branch Offices (Docket/Case Number: CO-95-2709-S)
Overview from FINRA’s Disciplinary Office:
From at least June 1993, the firm transacted business from 2 places of business in Connecticut without registering those locations as branch offices in alleged contravention of section 36b-6(d) of the Connecticut Uniform Securities Act.
Fined $5,000 for Allegedly Operating Unlicensed Branch Offices In Florida (Docket/Case Number: 1564-S-9/91)
Overview from FINRA’s Disciplinary Office:
On 10-16-91, the State of Florida entered a stipulation and consent agreement and final order on NWNL Management Corporation. The broker/dealer conducted business in Florida through three branch office locations that were not properly registered in this state.
Fined for Alleged Supervisory Failures In Identifying and Applying Available Sales Charge Waivers to Eligible Retirement Accounts and Charitable Organizations (AWC No. 2016050231901)
Overview from FINRA’s Disciplinary Office:
Between January 1, 2009, and May 26, 2016 (the “Relevant Period”), Voya disadvantaged certain retirement plan and charitable organization customers that were eligible to purchase Class A shares in certain mutual funds without a frontend sales charge (“Eligible Customers”). These Eligible Customers were instead sold Class A shares with a front-end sales charge or Class B or C shares with back-end sales charges and higher ongoing fees and expenses. During this period, Voya failed to establish and maintain a supervisory system and procedures reasonably designed to ensure that Eligible Customers who purchased mutual fund shares received the benefit of applicable sales charge waivers. As a result, Voya violated NASD Conduct Rule 3010 (for misconduct before December 1, 2014), FINRA Rule 3110 (for misconduct on or after December 1, 2014), and FINRA Rule 2010.
Fined $7,500 for Alleged Supervisory Failures In Complying with Trade Reporting and Compliance Engine (“TRACE”) Reporting Requirements for TRACE-eligible SP (AWC No. 2016048792701)
Overview from FINRA’s Disciplinary Office:
In connection with matter 20160487927, the TRACE Agency/Securitized Products (“SP”) Team of the Department ofMarket Regulation reviewed the firm’s compliance with Trade Reporting and Compliance Engine (“TRACE”) reporting requirements for TRACE-eligible SP during the period from October 1,2015, through December 31, 2015 (the “review period”). During the review period, the firm failed to timely report transactions in TRACE-eligible SP, as described below, and as a result, the firm violated FINRA Rules 6730(a) and 2010.
Fined $2,750,000 for Alleged Supervisory Failures In Identifying Red Flags in the Sale of Multi-Share Class Variable Annuities (“VAs”). (AWC No. 2014039172901)
Overview from FINRA’s Disciplinary Office:
This case concerns VFA’s failure to establish, maintain, and enforce a supervisory system reasonably designed to identify red flags in the sale of multi-share class variable annuities (“VAs”). Between July 2012 and August 2014 (the “Relevant Period”), VFA earned over $198 million, or approximately 25%, of its revenue from the sale of VAs. Approximately $72 million, or 36%, ofVFA’s VA revenue was earned from the sale of L-share VAs (“L-share contracts”). L-share contracts typically provide a shorter surrender period, of three to four years, than B-share contracts, which typically have a surrender period of 7 years. Insurance companies design L-share contracts so that customers pay a higher fee for the benefit of a shorter surrender period. L-share contracts are designed for investors with short-term time horizons or who want the optionality of being able to surrender the L-share contract sooner than a B-share contract. Pursuant to the terms established by the insurance company manufacturers, ifa purchaser chooses not to surrender an L-share contract during the surrender period, the purchaser continues to pay a higher annual fee for the life of the contract, unless the contract provides for a “persistency credit.”‘
During the Relevant Period, current VFA customers purchased 1,315 L-share contracts together with one of two Long-Term Income Riders. The first of these riders. frequently known as the Guaranteed Minimum Income Benefit Rider (GMIB), provides for the added benefit of guaranteed income for life. 7 he second, frequently known as the Guaranteed Minimum Withdrawal Benefit Rider (GMWB), provides for the added benefit of guaranteeing a minimum amount the customer will be able to withdraw from the contract over time (the riders are collectively referred to as the “Long-Term Income Riders”). Long-term income riders are designed for investors with long-term time horizons and cost purchasers additional annual fees in exchange for the added benefits. Moreover, because of the potentially incompatible time horizons, L-shares with Long-Term Income Riders may present a red flag that the purchase may not be suitable for a customer’s investment objectives and time horizon.
Of the 1,315 L-share contracts with Long-Term Riders VFA sold during the Relevant Period to current customers, approximately 70% of the customers had a long-term investment horizon, which should have been a red flag given the short term nature of L-shares. VFA, however, had no system to review for VA share classes and no system for identifying potential patterns of unsuitable sales. VFA also failed to provide its registered representatives and principals with adequate training and guidance on suitability considerations for multi-share class VAs.
Even though VAs accounted for more than a quarter of the Firm’s revenue during the Relevant Period, the Firm failed to establish and maintain an adequate supervisory system and procedures to ensure suitability of its VA sales and VA share class recommendations.
In addition, during the Relevant Period, VFA failed to reasonably supervise VA exchanges. VFA generated a monthly surveillance report, the “2330 Surveillance Report,” that was intended to monitor for inappropriate rates of VA exchanges by its registered representatives. VFA, however, failed to establish reasonable parameters for the generation of these reports. As a result, the 2330 Surveillance Report failed to capture the activity of over 90% of the Firm’s registered representatives who recommended multiple exchanges per year. Moreover, during 21 months out of the 22 months of the Relevant Period, VFA’s principals failed to review the 2330 Surveillance Report.
As a result of the foregoing, VFA violated NASD Rule 3010, FINRA Rules 2330(c), (d) and (e), and FINRA Rule 2010.
Fined $366,853.2 for Alleged Failure to Apply Volume Discounts to Certain Eligible Purchases of Non-traded Real Estate Investment Trusts (RE1Ts) and Business Development Companies (BDCs) (AWC No. 2014042939401)
Overview from FINRA’s Disciplinary Office:
From April 1, 2009 to April 30, 2014, VFA failed to apply volume discounts to certain customers’ eligible purchases of non-traded real estate investment trusts (RE1Ts) and business development companies (BDCs) in violation of FINRA Rule 2010. In addition, VFA failed to have in place an effective supervisory system and written supervisory procedures reasonably designed to ensure that its customers received appropriate volume discounts on eligible purchases of nontraded REITs and BDCs in violation of NASD Rule 3010(a) and (b) and FINRA Rule 2010.
From May 1, 2009 to April 30, 2014, VFA failed to apply sales charge discounts to certain customers’ eligible purchases of unit investment trusts (“UITs”) in violation of FINRA Rule 2010. In addition, VFA failed to establish, maintain and enforce a supervisory system and written supervisory procedures reasonably designed to ensure that customers received sales charge discounts on all eligible UIT purchases in violation of NASD Rule 3010(a) and (b) and FINRA Rule 2010.
Fined $1.2 Million for Alleged Supervisory Failures In Email Review and Retention (AWC No. 2012031270301)
Overview from FINRA’s Disciplinary Office:
This matter involves violations of the supervision and email retention requirements at the five Respondent firms over an extended period of time. These violations arose from the failure of the Respondent firms to retain and review emails over a period of years. As a result of these failures, millions of emails, affecting hundreds of employees, were either not retained, not reviewed, or not timely reviewed for periods ranging from two months to more than six years.
Fined $10,000 for Alleged Supervisory Failures In Promptly Forwarding and Returning Checks (AWC No. 2006003980501)
Overview from FINRA’s Disciplinary Office:
Sec Rule 15C3-3, NASD Rule 2110 – ING Financial Partners, Inc. failed to promptly forward checks submitted with application way business to issuers or to return checks to customers. By Failing to promptly forward or return checkers during the relevant time period, the firm failed to comply with the exemption in Sec Rule 15C3-3 (K) (2) (II) and became fully subject to the requirements of Sec Rule 15C3-3. Because the firm was operating under an exemption to Sec Rule 15C3-3, it failed to meet all of the requirements of the rule including maintaining a special reserved account for the exclusive benefit of customers pursuant to Sec Rule 15C3-3 (e).
Fined $1,291,000 for Allegedly Maintaining a Program in Connection With Retail Sales of Mutual Funds (AWC No. EAF0400760002)
Overview from FINRA’s Disciplinary Office:
NASD Rules 2110 and 2830(k)(1) – ING Financial Partners maintained a shelf space (revenue sharing) program known as the Strategic Partners Platform in connection with retail sales of mutual funds. In return for payments, mutual fund complexes that participated in the program received preferential treatment from the firm in the sales and marketing of their funds. The program provided increased access to the firm’s retail brokerage sales force, placement of materials on the firm’s websites, identification as a strategic partner on the ITS intranet websites including links to the strategic partners’ websites and payment of ticket charges for retail brokerage sales of strategic partners’ funds. Some mutual fund complexes made payments for participating in the program by directing approximately $4.5 million in mutual fund portfolio brokerage commissions to the firm through clearing brokers.
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