ING Group has agreed to pay $33 million to settle lawsuits which allege it took fees in exchange for promoting particular funds in retirement plans and did not disclose those fees.
New York Attorney General Eliot Spitzer’s office announced on Tuesday that, under the settlement agreement, ING would pay $30 million to New York state teachers who invested through ING and $3 million to New Hampshire state employees for failing to disclose the fees to retirement plan participants.
Somewhat ominously, David Brown, assistant attorney general and head of the agency’s investment protection bureau, told Reuters that Spitzer’s office is pursuing similar investigations of other retirement plan providers.
In addition, the settlement requires ING to provide full disclosure of its fee structure to investors and provide new information about the payments it collects for including other companies’ funds in its retirement plans. Reuters reports the disclosure includes a cover-page summary of plan costs, a chart showing how expenses can eat into returns over time, and a statement saying fund managers are paying ING to have their funds offered as options.
Spitzer is expecting the settlement to have an impact on the retirement industry and that clearer disclosure will help individuals and companies choose lower-cost providers, Reuters said.
Spitzer began investigating ING after reading reports of a deal between the insurer and a New York teachers union in which ING paid the union as much as $3 million a year to endorse and promote ING annuity plans and did not fully disclose these payments to union members.
The union settled with Spitzer in June, at the same time the New Hampshire’s Bureau of Securities Regulation began an investigation, saying ING committed fraud and allowed improper trades of mutual funds, according to Reuters. The Bureau also accused ING of not disclosing revenue-sharing agreements with fund companies.You can read more about the settlement at http://www.oag.state.ny.us/press/2006/oct/oct10a_06.html