Voya 2014 Annual Report Download - page 373

Voya Financial, Inc.
Notes to the Consolidated Financial Statements
(Dollar amounts in millions, unless otherwise stated)
damage demand from plaintiffs, discovery from plaintiffs and other parties, investigation of factual allegations,
rulings by a court on motions or appeals, analysis by experts and the progress of settlement discussions. On a
quarterly and annual basis, the Company reviews relevant information with respect to litigation and regulatory
contingencies and updates the Company’s accruals, disclosures and reasonably possible losses or ranges of loss
based on such reviews.
Litigation against the Company includes a case styled Healthcare Strategies, Inc., Plan Administrator of the
Healthcare Strategies Inc. 401(k) Plan v. ING Life Insurance and Annuity Company (U.S.D.C. D. CT, filed
February 22, 2011), in which sponsors of 401(k) plans governed by the Employee Retirement Income Security
Act (“ERISA”) claim that ING Life Insurance and Annuity Company (now known as Voya Retirement Insurance
and Annuity Company, “VRIAC”) has entered into revenue sharing agreements with mutual funds and others in
violation of the prohibited transaction rules of ERISA. Among other things, the plaintiffs seek disgorgement of
all revenue sharing payments and profits earned in connection with such payments, an injunction barring the
practice of revenue sharing, and attorney fees. On September 26, 2012, the district court certified the case as a
class action in which the named plaintiffs represent approximately 15,000 similarly situated plan sponsors. On
April 11, 2014, the parties submitted to the court a motion for preliminary approval of a class-wide settlement
agreement under which VRIAC, without admitting liability, would make a payment to the class of approximately
$15.0 and adopt certain changes in its disclosure practices. Final court approval which was required for the
settlement to become effective was received on September 25, 2014.
Litigation also includes Beeson, et al. v. SMMS, Lion Connecticut Holdings, Inc. and ING NAIC (Marin County
CA Superior Court, CIV-092545). Thirty-four Plaintiff households (husband/wife/trust) assert that SMMS, which
was purchased in 2000 and sold in 2003, breached a duty to monitor the performance of investments that
Plaintiffs made with independent financial advisors they met in conjunction with retirement planning seminars
presented at Fireman’s Fund Insurance Company. SMMS recommended the advisors to Fireman’s Fund as
seminar presenters. Some of the seminars were arranged by SMMS. As a result of the performance of their
investments, Plaintiffs claim they incurred damages. Fireman’s Fund has asserted breach of contract and
concealment claims against SMMS alleging that SMMS failed to fulfill its ongoing obligation to monitor the
financial advisors and the investments they recommended to Plaintiffs and by failing to disclose that a primary
purpose of the seminars was to develop business for the financial advisors. The Company denies all claims and
vigorously defended this case at trial. During trial, the Court ruled that SMMS had duties to Plaintiffs and
Fireman’s Fund that it breached. On December 12, 2014, the Court issued a Statement of Decision in which it
awarded damages in the aggregate of $36.8 to Plaintiffs and $7.5 to Fireman’s Fund. The Company objects to the
Court’s decisions and the Statement of Decision on the grounds that they are inconsistent with California law and
the evidence presented at trial. On January 7, 2015, the Court made final the award in favor of the Plaintiffs. The
Company filed an appellate bond that stays execution of that judgment while a motion for new trial and appeal
are pursued. The Court will hold a hearing in the second quarter of 2015 regarding whether to award punitive
damages to Fireman’s Fund.
18. Related Party Transactions
In the normal course of business, the Company enters into various transactions with affiliated companies. Parties
are considered to be related if one party has the ability to control or exercise significant influence over the other
party in making financial or operating decisions.
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