The Hartford will pay $55 million in penalties to settle securities violations with the Securities and Exchange Commission.
The SEC has negotiated the settlement to resolve allegations that three units of Hartford Financial Services Group Inc., based in Hartford, Conn., used fund and variable annuity assets to pay 61 broker-dealers for “shelf space” from 2000 to 2003 without telling the funds' shareholders or the funds' boards that fund assets would be used to pay marketing and distribution costs.
Shelf space gives preferred treatment to the holders of the funds.
Hartford Financial is not admitting or denying the SEC's findings, but the three company units–Hartford Investment Financial Services, L.L.C.; HL Investment Advisors, L.L.C.; and Hartford Securities Distribution Company Inc.–have agreed to give up $40 million in gains related to the shelf space arrangements and pay a $15 million fine. All $55 million will go to the affected Hartford Financial funds, the company said.
The company also has formed a disclosure review committee to review investment product disclosures.
Hartford Financial Chairman Ramani Ayer said in a statement that the company stopped using the broker-dealer compensation arrangements described by the SEC in 2003, and that the company has cooperated with the SEC.
“It was important to our company to have this matter resolved,” he said in the statement.
Allison Bell is associated editor of the National Underwriter Life & Health Edition
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Allison Bell
Allison Bell, a senior reporter at ThinkAdvisor and BenefitsPRO, previously was an associate editor at National Underwriter Life & Health. She has a bachelor's degree in economics from Washington University in St. Louis and a master's degree in journalism from the Medill School of Journalism at Northwestern University. She can be reached through X at @Think_Allison.
