Voya 2013 Annual Report Download - page 62

and employees registered or associated with any of our broker-dealer subsidiaries are subject to the Securities
Exchange Act of 1934, as amended (the “Exchange Act”) and to regulation and examination by the SEC, FINRA
and state securities commissioners. The SEC and other governmental agencies and self-regulatory organizations,
as well as state securities commissions in the United States, have the power to conduct administrative
proceedings that can result in censure, fines, cease-and-desist orders or suspension, termination or limitation of
the activities of the regulated entity or its employees.
Broker-dealers are subject to regulations that cover many aspects of the securities business, including,
among other things, sales methods and trading practices, the suitability of investments for individual customers,
the use and safekeeping of customers’ funds and securities, capital adequacy, recordkeeping, financial reporting
and the conduct of directors, officers and employees. The federal securities laws may also require, upon a change
in control, re-approval by shareholders in registered investment companies of the investment advisory contracts
governing management of those investment companies, including mutual funds included in annuity products.
Investment advisory clients may also need to approve, or consent to, investment advisory agreements upon a
change in control. In addition, broker-dealers are required to make certain monthly and annual filings with
FINRA, including monthly FOCUS reports (which include, among other things, financial results and net capital
calculations) and annual audited financial statements prepared in accordance with U.S. GAAP.
Pursuant to the Dodd-Frank Act, the SEC is authorized to establish a standard of conduct applicable to
brokers and dealers whereby they would be required to act in the best interest of the customer without regard to
the financial or other interest of the broker or dealer when providing personalized investment advice to retail and
other customers. A January 2011 SEC study acknowledges that the offering of proprietary products would not be
a per se violation of any such standard of care and that broker-dealers selling proprietary or a limited range of
products could be permitted to make certain disclosures about their limited product offerings and obtain customer
consents or acknowledgements. The SEC has indicated it may propose rules creating a uniform fiduciary
standard of conduct applicable to broker-dealers and investment advisers which, if adopted, may affect the
distribution of our products. See “—Financial Reform Legislation and Initiatives—Dodd-Frank Wall Street
Reform and Consumer Protection Act” below for more information on the Dodd-Frank Act. The SEC and
FINRA have also recently announced that they will be making the marketing and recommendation of IRA
rollovers an examination priority in 2014; accordingly, sales of ING U.S. rollover IRA products, particularly by
our affiliated broker-dealer firms, could be affected by this heightened regulatory scrutiny.
As registered broker-dealers and members of various self-regulatory organizations, our registered
broker-dealer subsidiaries are subject to the SEC’s Uniform Net Capital Rule, which specifies the minimum level of
net capital a broker-dealer is required to maintain and requires a minimum part of its assets to be kept in relatively
liquid form. These net capital requirements are designed to measure the financial soundness and liquidity of broker-
dealers. The uniform net capital rule imposes certain requirements that may have the effect of preventing a broker-
dealer from distributing or withdrawing capital and may require that prior notice to the regulators be provided prior
to making capital withdrawals. Certain of our broker-dealers are also subject to the net capital requirements of the
CFTC and the various securities and commodities exchanges of which they are members. Compliance with net
capital requirements could limit operations that require the intensive use of capital, such as trading activities and
underwriting, and may limit the ability of our broker-dealer subsidiaries to pay dividends to us.
Some of our subsidiaries are registered as investment advisers under the Investment Advisers Act of 1940,
as amended (the “Investment Advisers Act”) and provide advice to registered investment companies, including
mutual funds used in our annuity products, as well as an array of other institutional and retail clients. The
Investment Advisers Act and Investment Company Act may require that fund shareholders be asked to approve
new investment advisory contracts with respect to those registered investment companies upon a change in
control of a fund’s adviser. Likewise, the Investment Advisers Act may require that other clients consent to the
continuance of the advisory contract upon a change in control of the adviser. Further, proposals have been made
that the SEC establish a self-regulatory organization with respect to registered investment advisers, which could
increase the level of regulatory oversight over such investment advisers.
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