SEC Division of Corporation Finance no-action letter: Voya Financial, Inc.

March 8, 2018
Pamela L. Marcogliese, Esq.
Cleary Gottlieb Steen & Hamilton LLP
One Liberty Plaza
New York, NY 10006-1470
Re: In the Matter of Voya Investments, LLC and Directed Services LLC Voya Financial, Inc. – Waiver Request of Ineligible Issuer Status under Rule 405 of the Securities Act Dear Ms. Marcogliese:
This is in response to your letter dated March 2, 2018, written on behalf of Voya Financial, Inc. (“Voya”) and constituting an application for relief from Voya being considered an “ineligible issuer” under clause (1)(vi) of the definition of ineligible issuer in Rule 405 of the Securities Act of 1933 (“Securities Act”). Voya requests relief from being considered an ineligible issuer under Rule 405, due to the entry on March 8, 2018 of a Commission Order (“Order”) pursuant to Section 15(b) of the Securities Exchange Act of 1934, and Sections 203(e) and 203(k) of the Investment Advisers Act of 1940 (“Advisers Act”) against Voya Investments, LLC and Directed Services LLC (together, the “Voya Advisers”). The Order requires that, among other things, the Voya Advisers cease and desist from committing or causing any violations and any future violations of Sections 206(2) and 206(4) of the Advisers Act and Rule 206(4)-8 thereunder. Based on the facts and representations in your letter, and assuming the Voya Advisers comply with the Order, we have determined that Voya has made a showing of good cause under clause (2) of the definition of ineligible issuer in Rule 405 and that Voya will not be considered an ineligible issuer by reason of the entry of the Order. Accordingly, the relief described above from Voya being an ineligible issuer under Rule 405 of the Securities Act is hereby granted. Any different facts from those represented or failure to comply with the terms of the Order would require us to revisit our determination that good cause has been shown and could constitute grounds to revoke or further condition the waiver. The Commission reserves the right, in its sole discretion, to revoke or further condition the waiver under those circumstances. For the Commission, by the Division of Corporation Finance, pursuant to delegated authority. Sincerely, /s/ Tim Henseler Chief, Office of Enforcement Liaison Division of Corporation Finance

OneLibertyPlaza
New York, NY 10006-1470
T: +1 212 225 2000
F: +1 212 225 3999 clearygottlieb.com
WASНINGTON,D.C. •PARIS• BRUSSELS •LONDON• MOSCOW FRANKFURT•COLOGNE•ROME • MILAN •HONGKONG BEIJING• BUENOSAIRES • sAOPAULO. ABU DHABI . SEOUL CLEARY GOTTLIEB STEEN & HAMILTON LLP D: +12 12 225 2556 pmarcogl iese~cgsh. com VICTOR I. LE WKOW LESLIE N. SILVERMAN LEEG. BUCHHEIT JAMES MPEASLEE THOMASJ MOLONEY DAVIDG. SABEL JONATHAN' BLACKMAN MICHАELL RYAN ROBERT P. DAVIS VARON Z. REICH RICHARDS LINCER STEVEN G. HOROWITZ JARESADUNCAN STEVEN MLOEB CRAIG B. BROD EDWARDJ RODEN LAWRENCE FRIEDMAN NICOLASGRABAR CHRISTOPHER AUSTIN SETH GROSSHANDLER HOWARDS ZELBO DAVIDE BRODSKY ARTHUR NOHN RICHARDJ COOPER JEFFREY LEWD PAULJ SHIM STEVEN LWILNER ERIKA W. NIJENHUIS ANDRESDELACRUZ DAVIDC LOPEZ JAMES L. BROMLEY MICHAELA. GERSTENZANG LEWIS LIMAN LEVL DASBIN NEILO WHORI$KEH JORGEU JUANTORENA MICHAEL WEINRRRRGER DAVID LEINWAND DIANA WILLMAN JEFFREYA RODENTHAL ETHANA KLINGSBERG MICHAEL D. DAYAN CARMINE D. BOCCUZZI, JR. JEFFREYD KARPE KIMBERLY BROWN RLACKLOW ROBERTJ RAYMOND SUNG K KARG LEONARD C. JACOBY SANDRA L. FLOW FRANCISCO L. CESTERO FRANCESCAL. ODELL WILLIAM MCRAE JASON FACTOR MARGARET Ѕ. PEPONIS LISA M. SCHWEITZER JUAN G. GIRALDEZ DUANE MCLAUGHLIN BREIN S. PEACE MEREDITH E. KOTLER CHANTAL E. KIRDULA RENET J. O'REILLY ADAME FLEISHER REGRA O'NEAL GLENN P MCGRORY MATTHEW P. SALERNO MICHAEL J. ALBANO VICTORLHOU ROGER A. COOPER AMYN SHAPIRO JENNIFERKENNEDY PARK ELIZABETH LENAO LUKEA BAREFOOT PAMELA LMARCOGLIESE PAUL M TIGER JONATHANS KOLODNER DANIEL ILAR MEYERH FETIDA ADRIAN LEIPSIC ELIZABETH PICENO ADAM J. BRENNEIAAN ARID. MACKINNON JAMESE. LANGSTON JAREDGERBER COLIN D LLOYD COREYM GOODMAN RISK' ZUTSHI JANE VANLARE DAVID H. NERRINGYON KIMBERLVR SPOERRI AARON J. MEYERS DANIEL C. REYNOLDS REBIDERT PHRRSEHs SANDRAM. ROCKS
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KATHLEEN MENDEROER
WALLACE L. LARSON,JR
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ANDREWWEAVER
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JOHN V HARRISON
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HUMAYUN KNALD
CHRISC. LEE
KENNETHS BLAZEJEWSKI
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LOUISEM. PARENT
OE GOUNSEE
March 2, 2018
BY ELECTRONIC MAILANDFEDERALEXPRESS
TimHenseler
Chief, Office of EnforcementLiaison
Division of Corporation Finance
U.S. SecuritiesandExchange Commission
100 FStreet, N.E.
Washington,DC20549
Re: IntheMatterof Voya Investments, LLCandDirectedServicesLLC Waiver Request pursuanttoRule405of the Securities Act of 1933 Dear Mr. Henseler, We submit thisletteron behalf of our client, Voya Financial, Inc. ("VFI")inconnection with the settlement of the above-referenced administrativeandcease-and-desist proceeding by the U.S. SecuritiesandExchange Commission ("Commission") against VFI's indirect subsidiaries Voya Investments, LLC ("Voya Investments")andDirectedServicesLLC ("DirectedServices" and,together with Voya Investments, "Voya Advisers" or "Respondents"). Voya Investmentsisregisteredasan investment adviser. DirectedServiceswas dually registered asan investment adviserandbroker-dealer, until August22, 2017when it filedaForm-ADV-W withdrawing its investment adviser registration. DirectedServicesisstill registeredas abroker￾dealer. Because VFI hasaclass of securities listed on the NYSE pursuanttoSection12(b)of the Securities Exchange Act of 1934,asamended (the "Exchange Act"), itfilesperiodicandother disclosure reportsasrequired by the Exchange Act.Asindicatedinitsmost recentAnnual Report on Form10-K,VFI currentlyis awell-known seasoned issuer ("WKSI"). Cleary Gottlieb Stееп &HamiltonLLP or an affiliated entity has an officeineach of the cities listed above.

TimHenseler
SecuritiesandExchange Commission,p. 2
PursuanttoRule405("Rule405")of the Securјtјes Act of 1933,asamended (" Securјtјes Act"), VFI hereby respectfully requests that the Commission (or the Division of Corporation Finance ("Division"), pursuanttothe delegation of the authority of the Commission) determine that,forgood cause shown, itisnotnecessary under the circumstances that VFI be considered an "ineligible issuer" under Rule405 andtherefore waive the disqualification that would result from the Commission's order (the "Order")inthe above-referenced proceedings. VFI requests that this determination be effective upon the entry of the Order against the Respondentsinthe above￾referenced administrative proceeding. Back2round The Respondentshaveengagedinsettlement discussions with the Division of Enforcement ("Enforcement")and,as aresult of these discussions, the Respondentshave submitted anofferof settlement pursuanttowhich they consenttothe entry of the Order. Under the terms of theofferof settlement, the Respondentshaveneither admittednordenied any of the findings thatareinthe Order, exceptas tojurisdictionandsubjectmatter. The Order states that fromatleast August20, 2003 until March6, 2017(the"Relevant Period"), the Voya Advisers failedtodisclose conflicts of interests leadingtomisleading disclosuresinconnection with their securities lending practices. During theRelevantPeriod the Voya Advisers servedasinvestment advisers2tocertain insurance-dedicated mutualfunds ("Funds")offeredtovariable annuity, variable lifeandgroup annuity customers through insurance companies affiliated with the Voya Advisers ("Insurance Affiliates"). During theRelevantPeriod, the Voya Advisers engagedinthe practice of recalling,in advance of the applicabledividend recorddate,the portfolio securities of mutualfundsthey advised, including theFunds,that wereouton loan. This recall practice allowed the Insurance Affiliates, which wererecordshareholders of theFunds'shares,totakeatax deduction knownas thedividendreceived deduction ("DRD"). This recall practice resultedinan undisclosed conflict of interest. While the Insurance Affiliates benefitted from the DRD, theFunds andindividuals investedinthoseFundslost securities lending income during the period when the securities were recalled. The Voya Advisers knew that recalling securities benefited the Insurance Affiliates but failedtodisclose this conflict of interesttotheFunds' boardof directors("Board"). While the Funds'prospectuses disclosed thataFundmay lend its portfolio securities, that the loans earn incomefortheFunds, andthe loans could be terminated or recalledatanytime,the Voya Advisers failedtodisclose their practice of recalling securities or that this practice would benefit their affiliates while depriving theFunds andthe affiliates' contract holders of income. The Order finds that, based on such conduct, the Respondents violated Sectіon206(2) andSectіon206(4)of the Investment Advisers Act of 1940(the "Advisers Act"),andRule 206(4)-8thereunder. Under the
terms of the Order, pursuanttoSectіon15(b)of the Exchange Act,andSections203(e) and 203(k)of the Advisers Act, the Respondentshavebeen: (1)ordered toceaseanddesist from committing or causing any violationsandfuture violations of Sections C.F.R. § 200.30-1(a)(10). 2Asnoted, on August22, 2017DirectedServicesLLC ceasedtobe an investment adviser when it filedaForm￾ADV-Wwithdrawing its investment adviser registration.

TimHenseler
SecurјtјesandExchangeCommission,p. 3
206(2) and 206(4), andRule206(4)-8thereunder;(2)censuredand (3)orderedtopay disgorgement of $2,635,490.25 andprejudgment interest of $511,978.89,aswellas a civil money penaltyinthe amount of $500,000.00. Discussion In2005,the Commission revised the registration, communications,andoffering processes under the Securјtјes Act (the " Securјtјes OfferingReformRules").3Aspartof the Securјtјes OfferingReformRules, the Commission addedanew category of issuer, the "WKSI." Inordertoqualifyas aWKSI, an issuer mustnotbe an "ineligible issuer." The Securјtјes OfferingReformRules also permit, under Rules163, 164 and 433 of the Securјtјes Act, expanded communications with potential investors by issuers thatarenotdeemed ineligible issuers. Under Rule405,an issuer will be an ineligible issuer if, among other things:
(vi)Within the past three years ... , the issuer or any entity thatatthetimewasa subsidiary of the issuer wasmadethe subject of any judicial or administrative decree or order arisingoutof agovernmental action that:
(A) Prohibits certain conduct or activities regarding, including future violations of, the anti-fraud provisions of thefederalsecurities laws; (B) Requires that thepersonceaseanddesist from violating the anti-fraud provisions of thefederalsecurities laws; or (C) Determines that thepersonviolated the anti-fraud provisions of thefederal securities laws.4 Pursuanttothis ruleandbased on actions involving its indirect subsidiaries, the Voya Advisers specifiedinthe Order, VFI would become an ineligible issuer upon the entry of the Order absentawaiver from the Commission. Under Rule405,the Commission (or the Division pursuanttodelegated authority) may grant waivers of ineligible issuerstatus"uponashowing of good cause, that itisnotnecessary under the circumstances that the issuer be considered an ineligible issuer."5 Inthe Division's RevisedStatementon Well-Known Seasoned Issuer Waivers (the "RevisedStatement"),issued onApril 24, 2014,it identifies certainfactors relevanttoits assessmentindetermining whether an issuer has shown good cause that ineligible issuerstatusis notnecessaryforthepublicinterest or the protection of investors, namely:
з Securities OfferingReform,Securјtјes ActReleaseNo. 8591 (July19, 2005), 70Fed. Reg. 44, 722(Aug. 3, 2005). ° Rule405, 17C.F.R. § 230.405(definition of "ineligible issuer"). SId.

TimHenseler
SecurјtјesandExchangeCommission,p. 4

1. Thenatureof the violation or convictionandwhether it involved disclosureforwhich the
   issuer or any of its subsidiaries was responsible or calls into question the ability of the issuertoproduce reliable disclosure currentlyand inthe future;
2. Whether the conduct involvedacriminal conviction or scienter-based violation,as
   opposedto a civilor administrative non-scienter-based violation;
3. Who was responsibleforandwhat was the duration of the misconduct;
4. What remedialstepsthe issuer took;and
5. What the impact would be if the waiver requestisdenied.6
   ReasonsforGrantimaWaiver
   VEIbelieves thereisgood causetoconclude that itisnotnecessary under the circumstancesforittobe considered an ineligible issuer. As morefully described below, VFI respectfully requests that the Commission determine that, under the circumstances, it shouldnot be considered an ineligible issuer. Natureof the Violations Describedinthe Order Asdiscussed above, the Order states that during theRelevantPeriod the Respondents failedtodisclose their practice of recalling securitiesandthat this practice representedaconflict of interest that benefited their affiliates while depriving theFunds andthe affiliates' contract holders of income. Specifically, the Voya Advisers instructed their thirdpartylendingagentto recall securitiesouton loaninadvance of the applicabledividend recorddate,which,inthecase of theFunds,enabled the Insurance Affiliatestoclaim the DRD tax benefitfordividends received from theFunds'portfolio securities. On the other hand, theFunds andtheir contract holders — who werenoteligibletoreceive the DRD — lost securities lending income. As aresult of the Voya Advisers' actions, since June2011 the Insurance Affiliates receivedatax benefit of $2,635,490.25while theFundslost$2,024,355.48 insecurities lending income. The amounts of tax benefitandlost securities lending income were immaterialtothe Voya AdvisersandVFI throughout the entirety of theRelevantPeriod. The Voya Advisers did disclosetotheBoardthat the DRD could be consideredafall-out benefittoaffiliates of the Respondents, but didnotdisclose that theFunds andtheir contract holders were losing securities income.As aresult, theBoardwasnotaware of the conflicts of interest arising from the recall of securities. On March6, 2017,the Respondents instructed their securities lendingagenttostop recalling securities on loaninadvance of thedividend recorddate. See Division of Corporation Finance "RevisedStatementon Well-Known Seasoned Issuer Waivers,"April 24, 2014.

TimHenseler
SecuritiesandExchange Commission,p. 5
The disclosure violation describedinthe Order, which falls under Sectіon206(2) and Sectіon206(4)of the Advisers Act,andRule206(4)-8thereunder, involved only the Respondents, which sit several levels below VFIinVFI's organizational structure, identified only this issue relatingtothe Voya Advisers' disclosures,anddidnotinvolve orhaveany impact on any of VFI's other entitiesuptoandincluding VFI itself. The Orderdoesnotstate that VFI failedtocomply with disclosure requirements applicabletoVFI,as aWKSI or otherwise, under the Securities Act or the Exchange Act or that VFImadeany misrepresentationsinits own publicdisclosures. Infact, the disclosure policiesand proceduresapplicabletothe Respondents describedin the Orderarecompletelyseparate anddistinct from the disclosure policiesand procedures relatingtothe issuing of securitiesandfilings under the Exchange Act applicabletoVFI. Moreover, the responsibilities of the individuals responsibleforthe violations describedinthe Orderarecompletelyseparate anddistinct from the responsibilities of individuals responsiblefor any disclosures of VFI, relatingtothe issuing of securitiesandfilings under the Exchange Act. Accordingly, the violations describedinthe Orderdonotcall into question the ability of VFIto provide reliable disclosure currentlyand inthe future. Criminal Convictions or Scienter-Based Violations The above described RevisedStatement,which identifiesfactors relevanttodetermining whether an issuer has shown good cause that an ineligible issuerstatusisnotnecessaryforthe publicinterest orforthe protection of investors, also addresses the issuer's burdentoshowgood cause. The Division states that where thereis acriminal conviction orascienter-based violation involving disclosureforwhich the issuer or any of its subsidiaries was responsible, the issuer's burdentoshowgood cause thatawaiverisjustified would be significantly greater. The Orderdoesnotstate that VFI or the Respondents engagedinany conduct involvinga criminal conviction or scienter-based violation. The violations describedinthe Order, which fall under Sectіon206(2) andSectіon206(4)of the Advisers Act,arenotscienter-based violations. Furthermore, the violations describedinthe Orderdonotgive risetoor constituteacriminal conviction. ResponsibilityforandDuration of the Violations Describedinthe Order The violations describedinthe Order involved only the Respondentsanddidnotinvolve any of VFI's other entities, including VFI itself. The violations described involved only the Respondents' practicesanddisclosures relatingtotheir recalling of securities. The violations did notinvolve any offerings by VFI of its securities or disclosures relatedtoVFIand,asnoted above, the violations describedinthe Orderdonotstate that VFImadeany omissions or misrepresentationsinits written materialsanddisclosures relatingtothe issuing of securities or filings under the Exchange Act. VILsits five levels below VFIandDSL sits three levels below VFI.

TimHenseler
SecuritiesandExchange Commission,p. 6
Furthermore,nooneatVFI whichisan indirectholdingcompanyforthe Respondents, knew about the circumstances thatgaverisetothe violations describedinthe Order; the disclosure policiesand proceduresforthe RespondentsandVFIarecompletelyseparate. RemedialStepsTakenandtobe Taken The Order states that the Respondents' failuretodisclose their practice of recalling securitiesinadvance of thedividend recorddateandthe resulting conflict of interest datesback toatleast August20, 2003. However, since approximatelyApril 2016, Voya Investments has undertakena seriesof efforts designedtoensure that these proems willnotrecur. The Respondentshaveceased their practice of recalling securitiesforthe reasons describedinthe Order. Additionally, Respondents reviewed with theBoardthe securities lending practices of the Funds.These discussions included theFunds'recall practicesaswellasthe effects of those practices on theFunds,the affiliates of the Respondentsandthe affiliates' customers. Asthe Divisionisaware, VFI has previously requestedawaiverinMarch 2017 regarding its WKSIstatusfrom the Divisioninconnection with settlements involving its broker-dealerand investment adviser indirect subsidiary, Voya Financial Advisors, Inc. ("VFA").Awaiver was grantedinconnection with VFA's failuretodisclose that it received mutualfund service and administrative fees fromathirdparty clearingbroker, which resultedinviolations of Sections 206(2), 206(4) and 207 of the Advisers Act,andRule 206(4)-7 thereunder. Thesetof factsand parties relatedtothis previousmatterareinnoway relatedtothe factsandparties described under thepresentOrder.Morespecifically, this pastmatterdoesnot inany way relatetothe Respondents' practice of recalling securitiesandany remedialstepstakeninresponse tothe conductatissueinthispriormatterarenotimplicated by the Respondents' practice. Moreover, like the conduct described above,noneof the conductatissueinthismatter relatedtothe reliability of VFI's current or future disclosures. Impact if the Waiver RequestisDenied Asthe Divisionisalso aware, VFI has an automatically effective Form S-3ASR registrationstatement(the "VFI WKSI Shelf'), whichisavailable onlytoWKSIs ('`WKSI Shelf'). Loss of WKSIstatuswould significantly impact the ability of VFItoquicklyand effectively access the capital markets. Losing WKSIstatuswould eliminate many of the advantagesforVFI of using shelf registration statements. Among other things, VFI would be requiredtopayallfees upfrontatthetimeof registrationandinclude additional informationin its registration statements. VFI's registration statements would also be subjectto areview period, limiting its flexibilityandabilitytoaccess the capital markets when market conditionsare advantageous withatransaction tailoredtomarket demands, which would resultinincreased uncertaintyas tothe potentialtimingforexecuting transactions under the registrationstatement. As adirect result, depending on thetiming andmarket conditions, VFI may be forcedtorestrict its
capital raising efforts from securitiessalestoprivateofferings. The proceduralandfinancial flexibility that the automatic shelf registration process providesiscritically importantin facilitating swift execution of VF"s fundingandcapital raising activitiesforVFIandits shareholders.Inaddition, VFI's inabilitytouse free-writing prospectuses ("FWPs") that can

TimHenseler
SecurјtјesandExchangeCommission,p. 7 includemarketingmaterial that facilitates an offering (including using thirdpartyoffering participants) could harm VFI's abilitytoefficiently respondtomarket conditions. VFI filed the VFI WKSI Shelf on June23, 2017,which registeredavariety of securities, including debt securities, guarantees of debt securities, common stock, preferred stock, warrants and units. In2015,VFI completed its separation fromING GroepNV,its former parent company ("ING"). Inconnection with this separation, pursuantto aregistration rights agreement between VFIandING, INGhas sold approximately$3.5billion of common stock registered under the VFI WKSI Shelf througha seriesof transactions.INGcontinuestohold certain of VFI's securities thataresubjecttoregistration rights agreement, namely, warrantsandthe shares of common stock underlying the warrants. The warrantsheldbyINGandthe shares of common stock underlying such warrantsareregistrable upon the demand of ING.Because thesalesof such shares will be dependent on market conditions, VFI cannot predict if or whenINGwill seek totake advantage of these rights under the registration rights agreement,anditispossible they maydosoin multipletransactions.As aresult, the inabilitytosell such warrantsandunderlying shares pursuanttothe VFI WKSI Shelf would adversely affect VFI's abilitytoefficiently respondtosuch contractual demands. VFI also has issuedandmay issue debt securitiesinthe financial markets fromtime to time tofinance its operations, subjecttomarket conditionsandother considerations.For example,inJuly2017 andJune2016,VFI issued$400millionand $800million, respectively, aggregateprincipalamounts of seniornotesregistered under the VFI WKSI Shelf. Additionally, in 2013,the yearprior tofiling the VFI WKSI Shelf, VFI issued$3 billion aggregateprincipal amount of notesduring the year. It issued suchnotesonaprivateplacementbasisbecause it was notyet WKSI eligibleand hadtoincur thetimeandexpense of registering the exchange of the restrictednotes forunrestrictednotespursuanttomultipleA/Bexchangeoffers. Because VFI expectsto continue tofinance its operations, subjecttomarket conditions, through the issuance of debtinthepublicmarkets, the inability of VFItouse the VFI WKSI Shelf would adversely affect its abilitytoefficientlyandcost-effectively take advantage of market conditions.

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RequestforWaiver
Insum, these factssupportaconclusion that VFI can demonstrateandhas demonstrated that ineligible issuerstatusisnotnecessaryforthepublicinterest or the protection of investors. Forthe foregoing reasons, VFI respectfully submits that, based on thefactorsdescribed above, itisnotnecessary under the circumstancesforVFItobe deemed an ineligible issuerand that good cause existsforthe relief requestedinthisletter. The facts alsosupportaconclusion that the granting of awaiver would be entirely consistent with the guidelinesforrelief establishedinthe RevisedStatement. Furthermore, because the conduct describedinthe Order doesnotrelatetoVFI's abilitytoproduce reliable disclosureas aWKSI, including with respect tooffering securities, grantingawaivertoVFIinthis instance would be consistent with the publicinterestandthe protection of investors.

TimHenseler
SecuritiesandExchange Commission,p. 8
We therefore respectfully request that the Commission (or the Division pursuantto delegated authority) makeadetermination that VFIisgrantedawaiver from designationasan ineligible issueratthetimethat the Orderisissued by the Commission. Please contactmeat 212-225-2556or by emailatpmarcogliese@cgsh.comif you should haveany questions regarding this request. Sincerely, PamelaL.arogliese cc: PatriciaJ. Walsh, Voya Financial, Inc. Trevor Ogle, Voya Financial, Inc. CraigB. Brod,Cleary GottliebSteen&HamiltonLLP