New Hampshire is creating a big problem for ING Groerp. The New Hampshire Bureau of Securities Regulation has issued a cease-and-desist order against ING Financial Advisors and ING Life Insurance and Annuity Co. for “contributing” to market timing in state-employee retirement plans, as well as for “revenue sharing,” by not disclosing that it received fees from poor-performing funds in exchange for recommending them as investments. The complaint against ING charges that the company received “millions of dollars” between 2001 and 2004 from these favored funds, while the state was under the impression that “the funds were chosen solely based on performance.” According to the complaint,13 of 18 investment options offered to state employees had underperformed their relevant benchmarks. ING now discloses on its Web site that “compensation in ING Financial Partners by our strategic partners may pose a financial incentive for us to promote these products over other products.” Mark Connolly, New Hampshire securities director, told the Wall Street Journal such a notice does not constitute proper disclosure. ING, which reportedly may be under investigation in two other states for similar allegations, said it was “surprised and disappointed” by the New Hampshire action, as it had cooperated “fully and in good faith.”
