Hartford Financial Services Group Inc. announced Wednesday that it has agreed to pay $55 million to settle directed brokerage charges brought by the Securities and Exchange Commission.
The settlement will be distributed to funds that participated in the Connecticut company’s directed brokerage program. Hartford said the settlement costs have already been accounted for in its previously disclosed charges for regulatory matters.
The SEC investigation focused on Hartford’s revenue-sharing payments to broker-dealers and its program for directing mutual fund portfolio trades to them in recognition of their selling the company’s funds.
The agency found that Hartford improperly benefited by using directed brokerage to reduce its revenue-sharing obligations to broker-dealers without disclosing that benefit to the mutual fund shareholders or to its mutual funds’ boards.
Ramani Ayer, Hartford’s chairman and chief executive, said in a press release that it discontinued this practice at the end of 2003 and that it has formed a disclosure review committee to monitor investment products.
The company said in the release that it settled the matter without admitting or denying any wrongdoing.
