The Labor Department announced
Feb. 4 that it reached a $5.2 million settlement with ING Life Insurance and
Annuity Co. to compensate the company's retirement plan clients for ING's
undisclosed practice of retaining investment gains achieved when the company
failed to timely process transactions.
According to DOL, ING's failure to disclose its policy on reconciling
transaction processing errors violated the Employee Retirement Income Security
In addition to the $5.2 million settlement, which represents gains generated
by its treatment of transaction processing errors, ING agreed to pay $524,509 in
civil penalties, disclose its transactions policy to current and prospective
ERISA-plan clients, and adopt procedures to terminate plans through the Employee
Benefits Security Administration's Abandoned Plan Program.
ING provides custodial and third-party administration services to about
35,000 ERISA-covered plan clients. ING, as part of an internal policy, retains
gains derived from transactions that failed to timely process and from
reprocessing erroneous transactions. ING used the date required by its contracts
when these transactions occurred, which caused gains and losses when the share
or unit value differed between the contract date and the actual trade date.
ING's contracts obligated it to restore plan losses, but ING kept any gains from
The Labor Department alleged that ING violated ERISA by failing to disclose
the gains it achieved from the transaction processing errors. As part of the
settlement, ING agreed to pay $5.2 million to retirement plan clients affected
by the internal policy. According to DOL, the $5.2 million represents the net
gain ING retained from the internal policy from 2008 to 2011.
The settlement also requires ING to disclose the policy to current and
prospective ERISA-plan clients, grant existing clients an opportunity to object
to the policy, and allow prospective clients to incorporate the policy into
contract and service agreements. Additionally, ING is required to disclose to
clients that the gains it keeps under the policy are additional compensation for
ING's services and that the compensation is being reported in accordance with
ERISA Section 408(b)(2). ING also agreed to contact plan sponsors and serve as a
qualified termination administrator for any plan deemed abandoned.
According to the Labor Department, the settlement would restore funds to
1,400 retirement plans impacted by the ING policy.
The full text of the DOL announcement is at http://www.dol.gov/opa/media/press/ebsa/EBSA20130071.htm.