Voya 2014 Annual Report Download - page 75

Securities Regulation with Respect to Certain Insurance and Investment Products and Services
Our variable life insurance, variable annuity and mutual fund products are generally “securities” within the
meaning of, and registered under, the federal securities laws, and are subject to regulation by the SEC and
FINRA. Our mutual funds, and in certain states our variable life insurance and variable annuity products, are also
“securities” within the meaning of state securities laws. As securities, these products are subject to filing and
certain other requirements. Sales activities with respect to these products are generally subject to state securities
regulation, which may affect investment advice, sales and related activities for these products.
Some of our subsidiaries issue certain fixed and indexed annuities supported by the company’s general
account and/or variable annuity contracts and variable life insurance policies through the company’s separate
accounts. These subsidiaries and their activities in offering and selling variable insurance and annuity products
are subject to extensive regulation under the federal securities laws administered by the SEC. Some of our
separate accounts, as well as mutual funds that we sponsor, are registered as investment companies under the
Investment Company Act, and the units or shares, as applicable, of certain of these investment companies are
qualified for sale in some or all states, the District of Columbia and Puerto Rico. Each registered separate account
is generally divided into sub-accounts, each of which invests in an underlying mutual fund, which is itself a
registered investment company under the Investment Company Act. In addition, the variable annuity contracts
and variable life insurance policies issued by the separate accounts and certain fixed and indexed annuities
supported by some of our subsidiaries’ general accounts, as well as mutual funds we sponsor, are registered with
the SEC under the Securities Act. Certain variable contract separate accounts sponsored by our subsidiaries are
exempt from registration, but may be subject to other provisions of the federal securities laws.
Broker-Dealers and Investment Advisers
Our securities operations, principally conducted by a number of SEC-registered broker-dealers, are subject
to federal and state securities, commodities and related laws, and are regulated principally by the SEC, the CFTC,
state securities authorities, FINRA, the Municipal Securities Rulemaking Board and similar authorities. Agents
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 indicated in 2014 it would decide whether to propose rules creating a
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