Voya 2014 Annual Report Download - page 118

relationships with institutions that are subject to direct regulation in non-U.S. jurisdictions . We are unable to
predict how any such regulations could directly or indirectly affect our business, our relationship with ING
Group and other foreign institutions or our results of operations, financial condition and liquidity. For a further
discussion of foreign regulation and its potential effect on us, see “Item 1. Business—Regulation—International
and National Regulatory Initiatives that May Affect Us as a Consequence of our Affiliation with ING Group”.
Changes in U.S. federal and state securities laws and regulations may affect our operations and our
profitability.
U.S. federal and state securities laws apply to sales of our mutual funds and to our variable annuity and
variable life insurance products (which are considered to be both insurance products and securities) as well as to
sales of third-party investment products. As a result, some of our subsidiaries and the products they offer are
subject to regulation under these federal and state securities laws. Our insurance subsidiaries’ separate accounts
are registered as investment companies under the Investment Company Act. Some variable annuity contracts and
variable life insurance policies issued by our insurance subsidiaries also are registered under the Securities Act.
Other subsidiaries are registered as broker-dealers under the Exchange Act, are members of, and subject to,
regulation by FINRA, and are also registered as broker-dealers in various states, as applicable. In addition, some
of our subsidiaries are registered as investment advisers under the Investment Advisers Act.
Securities laws and regulations are primarily intended to ensure the integrity of the financial markets and to
protect investors in the securities markets or investment advisory or brokerage clients. These laws and
regulations generally grant supervisory agencies broad administrative powers, including the power to limit or
restrict the conduct of business for failure to comply with those laws and regulations. A number of changes have
recently been proposed to the laws and regulations that govern the conduct of our variable insurance products
business and our distributors that could have a material adverse effect on our results of operations and financial
condition. For example, the Dodd-Frank Act authorizes the SEC to establish a standard of conduct applicable to
brokers and dealers when providing personalized investment advice to retail customers. This standard of conduct
would be to act in the best interest of the customer without regard to the financial or other interest of the broker
or dealer providing the advice. In 2014, the SEC and FINRA announced that the marketing and recommendation
of IRA rollovers was an exam priority; accordingly, sales of Voya Financial rollover products, particularly by our
affiliated broker-dealer firms could be affected by this heightened regulatory scrutiny. 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 them. Changes to these laws or regulations that
restrict the conduct of our business could have an adverse effect on our results of operations and financial
condition.
Changes to federal regulations could adversely affect our distribution model by restricting our ability to
provide customers with advice.
The prohibited transaction rules of ERISA and the Internal Revenue Code generally restrict providing
investment advice to ERISA plans and participants and IRAs if the investment recommendation results in fees
paid to the individual advisor, his or her firm or their affiliates that vary according to the investment
recommendation chosen. In March 2010, the DOL issued proposed regulations that provide limited relief from
these investment advice restrictions. The DOL issued final rules in October of 2011 and did not provide
additional relief regarding these restrictions. As a result, the ability of certain of our investment advisory
subsidiaries and their advisory representatives to provide investment advice to ERISA plans and participants, and
with respect to IRAs, will likely be significantly restricted. Also, the fee and revenue arrangements of certain
advisory programs may be required to be revenue neutral, resulting in potential lost revenues for these
investment advisers and their affiliates.
Other proposed regulatory initiatives under ERISA may negatively impact our broker-dealer subsidiaries. In
particular, the DOL issued a proposed regulation in October 2010 that would, if adopted as proposed,
significantly broaden the circumstances under which a person or entity providing investment advice with respect
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