The White Law Group reviews the regulatory history of Voya Financial Advisors.
Voya Financial Advisors Background
Voya Financial Advisors, Inc. (CRD#: 2882/SEC#: 801-46585,8-13987), based in Windsor, CT, is a dual registered broker dealer and investment advisory firm. It has approximately 800 registered representatives and over 300 branch offices.
Voya operates under the following names: ING FINANCIAL PARTNERS, INC, WASHINGTON SQUARE SECURITIES, INC., VOYA FINANCIAL ADVISORS, INC., VARIABLE LIFE BROKERAGE DISTRIBUTORS, NWNL MANAGEMENT CORPORATION, ING FINANCIAL PARTNERS, INC., according to its CRD.
According to its CRD/Broker report, Voya Financial Advisors, registered in 1968, has 42 disclosures on its record, including 33 regulatory actions and 9 arbitrations, among others.
Regulatory actions taken against a broker-dealer may include censures, fines, suspensions, and restitution, among others. They can have grave consequences for a broker-dealer’s profile and reputation. The following is a review of FINRA and the SEC’s regulatory actions involving Voya Financial Advisors.
FINRA Fines Voya Financial $500,000
January 25, 2024 – Between March 2018 and September 2019, Voya Financial Advisors violated FINRA Rules 2040 and 2010 by paying approximately $2.9 million in transaction-based compensation to an unregistered entity. FINRA Rule 2040 prohibits member firms from paying such compensation to entities not registered as broker-dealers but required to be so.
The unregistered entity, a limited liability company owned by an unregistered insurance agent, received payments in connection with the sale of variable universal life insurance (VUL), a securities product.
Voya and the unregistered entity had a Variable Marketing Agreement for services related to VUL sales. Despite receiving approximately $8.7 million in gross compensation from VUL sales, Voya’s violation resulted in a $500,000 fine and a censure.
Breach of Fiduciary Duty
December 21, 2020 – The Securities and Exchange Commission (SEC) ordered Voya Financial Advisors, Inc. to pay $23 million on December 21, 2020, to settle charges of breaching fiduciary duties between January 2013 and December 2018.
The violations involved mutual fund share class selection practices, sweep account revenue sharing, and alternative investment selection practices. Voya recommended higher-cost mutual fund share classes, failed to disclose revenue sharing with its clearing broker, and directed clients to invest in money market funds that paid more revenue sharing while providing lower investment yields.
The SEC imposed a $9 million civil penalty, approximately $11.6 million in disgorgement, and $2.4 million in prejudgment interest.
Data Security Breach
September 27, 2018 –The Securities and Exchange Commission (SEC) has censured and fined Voya Financial Advisors $1 million over a data security breach in April 2016. Criminals impersonating independent advisers called the firm’s support line, requesting new passwords that granted access to the personal information of 5,600 Voya Financial customers.
The intruders created new online customer profiles and accessed account documents. Despite steps taken by Voya upon notification, the attackers continued accessing the Voya portal through other compromised adviser logins.
The SEC alleges that weaknesses in Voya’s cybersecurity procedures facilitated the breach. Voya agreed to the censure, a $1 million penalty, and will engage an independent consultant to assess its policies and procedures.
More Supervisory Issues – SEC & FINRA Sanctions
November 2, 2016 – Voya Financial Advisors is accused of failing to establish a supervisory system to identify red flags in the sale of multi-share class variable annuities (VAs) between July 2012 and August 2014. VFA earned over $198 million from VA sales during this period, with approximately 36% of VA revenue coming from the sale of L-share VAs.
These contracts, designed for short-term investors, were often sold with Long-Term Income Riders, indicating potential suitability concerns due to conflicting time horizons. Despite this, VFA lacked a system to review share classes, failed to identify unsuitable sales patterns, and provided inadequate training on suitability considerations.
The firm also failed to reasonably supervise VA exchanges, with its surveillance reports capturing only a fraction of registered representatives recommending multiple exchanges. As a result, VFA violated NASD Rule 3010, FINRA Rules 2330(c), (d), and (e), and FINRA Rule 2010.
The firm was censured and fined $2,750,000 and ordered to pay restitution to investors.
Overcharges and Supervisory Failures
July 20, 2015 – VOYA agreed to sanctions in which FINRA imposed a censure, fine of$325,000, and restitution of$41,853.20. FINRA found that the firm failed to apply volume and sales-charge discounts for 10 transactions in nontraded REITs, business-development companies, and UITs, and failed to establish and maintain adequate supervisory systems and procedures regarding the same.
Broker Misconduct and Customer Complaints
All broker-dealers have a responsibility to adequately supervise its employees. They must ensure the necessary procedures and systems to detect misconduct.
There have been several cases of registered representatives employed by Voya Financial Advisors who were allegedly involved in broker misconduct and fraudulent activities.
When brokers violate securities laws, such as making unsuitable investments, the brokerage firm they are working with may be liable for investment losses through FINRA Arbitration.
January 24, 2024 – According to FINRA’s public records, several Voya representatives were suspended for 1 month and fined $5,000 for falsely certifying to the State of New York that they had personally completed the continuing education (CE) required to renew their state insurance license when, in fact, they had other people complete the CE on their behalf. These were violations of FINRA Rule 2010.
Voya Broker Barred after Customer Complaints Alleged Unsuitable Investments
April 4, 2023 – FINRA has barred financial advisor Jay Jaroensabphayanont after he allegedly failed to comply with an arbitration award or settlement agreement and did not respond satisfactorily to a FINRA request for compliance information.
Jaroensabphayanont, formerly affiliated with Voya Financial Advisors, was named in a customer complaint that included allegations of violating the Securities Act of Washington, breaching fiduciary duty, making unsuitable investment recommendations, and negligence. The suspension escalated to a bar due to his failure to adhere to arbitration or settlement terms and respond adequately to FINRA inquiries.
Jim Flynn, Voya Advisor has 69 Customer Complaints
May 4, 2023 – Financial advisor Jim Flynn, has 69 investor complaints since 2013, with 25 settled for over $3.5 million. Flynn, formerly registered with Voya Financial Advisors in Greenville, SC, was terminated in February 2017 for providing misleading information during a complaint investigation. FINRA barred him in June 2018 after he failed to request termination of his suspension within three months.
The White Law Group Files a Claim against Voya Financial Advisors
December 10, 2019 – The White Law Group filed a FINRA claim against Voya Financial Advisors on behalf of a Bolingbrook, IL couple, requesting damages for alleged violation of common law fraud, breach of fiduciary duty, negligence, and negligent supervision. The Statement of Claim alleged Voya Financial Advisors unsuitably invested its clients in business development companies and high risk non-traded REITs. The damage amount requested was between $100,000 and $500,000.
National Securities Attorneys
The White Law Group, LLC is a national securities fraud, securities arbitration, investor protection, and securities regulation/compliance law firm dedicated to helping investors in claims in all 50 states against their financial professional or brokerage firm. Since the firm launched in 2010, it has handled over 700 FINRA arbitration cases.
The Financial Industry Regulatory Authority (FINRA) operates the largest dispute resolution forum in the securities industry. In fact, FINRA Dispute Resolution is the forum for all disputes between investors, brokerage firms and individual brokers. This is because most brokerage firms have mandatory arbitration clauses in their account agreements that require investors to file their disputes through FINRA.
The White Law Group represents investors in all types of securities related claims, including claims involving stock fraud, broker misrepresentation, churning, unsuitable investments, selling away, and unauthorized trading, among many others.
With over 30 years of securities law experience, The White Law Group has the expertise to help investors who were defrauded by their financial advisors. For more information, please visit our website, www.whitesecuritieslaw.com.
If you have suffered losses investing with Voya Financial Advisors and would like to speak with a securities attorney, please call The White Law Group at 888-637-5510.
Tags: broker-dealer review, FINRA, Jim Flynn, SEC sanctions, Voya Financial Advisors Last modified: February 2, 2024