The Hartford Financial Services Group Inc. paid $115 million to settle allegations it allowed illegal trading in some mutual funds, the company and the attorneys general of Connecticut and New York announced last week.
Connecticut Attorney General Richard Blumenthal said The Hartford paid so-called contingent commissions to insurance brokers and agents, accusing it of steering business in exchange for secret commissions.
The Hartford said the staff of the U.S. Securities and Exchange Commission has concluded its investigation into allegations of market timing — the rapid and frequent trading in mutual funds that can benefit some investors at the expense of others — and the SEC would recommend against any action.
A spokesman for the SEC would not comment.
The Hartford took a charge of $66 million, or 22 cents a share, in 2005 to establish a reserve for federal and state investigations related to market timing.
Blumenthal said The Hartford “failed to act swiftly and strongly to stop and disclose market timing despite its duty to do so.”
The Hartford did not encourage or invite the illegal practices, but it “knew the harm and was lax and late in halting it,” he said.
Ramani Ayer, chairman and chief executive of The Hartford, said company officials are “pleased to have these matters behind us.”
“We have worked assiduously to strengthen and improve our business practices and will continue to do so,” he said in a statement.
New York Attorney General Andrew Cuomo said The Hartford ended its “troubling history and pledged to restore consumer confidence as well as transparency and competition in the marketplace.” (AP)
