SEC Hits Dutch Asset Manager AEGON with $98 Million Fine

Aegon had discovered errors in certain investment strategies developed by a former portfolio manager.

The Securities and Exchange Commission said on Monday that it has reached settlements with the US subsidiaries of AEGON, under the terms of which the global asset manager agreed to pay approximately $98 million over errors related to asset allocation models used on a series of Transamerica funds.

The investigation was launched after Aegon discovered errors in certain investment strategies developed by a former portfolio manager of Aegon USA Investment Management, LLC and offered through Transamerica mutual funds.

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Aegon is a multinational life insurance, pensions and asset management company headquartered in the Netherlands.

The investigation process had been going on for several years, as the watchdog also had concerns about whether the Dutch insurer had made appropriate disclosures to clients.

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The SEC explained: “The SEC’s order finds that the models, which were developed solely by an inexperienced, junior AUIM analyst, contained numerous errors, and did not work as promised. The SEC found that when AUIM and TAM learned about the errors, they stopped using the models without telling investors or disclosing the errors.”

Aegon revealed in its latest financial statement that it had set aside €85 million to settle the probe. The $350 billion asset manager said that AUIM was dropped as a sub-advisor of the mutual funds in April 2015, and the remaining portfolios two months later.

The SEC said that AEGON did not admit or deny wrongdoing in agreeing to pay the civil fine, which included “$53.3 million in disgorgement, $8 million in interest, and a $36.3 million penalty.” The SEC will create and administer a fair fund to distribute the entire $97.6 million to affected investors.

Separately, the SEC fined AUIM’s former executives, who were the cause of the violations. Chief Investment Officer Bradley Beman and Director of New Initiatives Kevin Giles were fined $65,000 and $25,000 respectively.

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