Aegon USA Investment Management, Transamerica Asset Management and two other Aegon USA affiliates were ordered by the SEC to refund $97 million to investors because the firms used faulty quantitative investment models.
Also, Bradley Beman, former global chief investment officer of Aegon USA Investment Management, and Kevin Giles, Aegon USA's former director of new initiatives, settled with the Securities and Exchange Commission over charges related to "compliance failings" in the use of the models, the SEC said in a news release Monday.
Along with Transamerica Asset Management, Aegon USA affiliates Transamerica Financial Advisors and broker-dealer Transamerica Capital used models for retail investments that were developed by an inexperienced, junior Aegon USA analyst with "numerous errors" that did not work as promised, the SEC said. Also, Aegon USA and Transamerica did not disclose to investors the errors that had occurred, the SEC said.
The Aegon USA units as well as Messrs. Beman and Giles did not admit or deny the charges.
Mr. Beman will pay $65,000 in penalties and Mr. Giles, $25,000, the SEC said.
Mr. Beman is now co-founder, managing director and chief investment officer at Tortoise Credit Strategies. "While it is our understanding that there was no intent and no personal benefit to Mr. Beman, and the settlement notes that others from his prior employer also were involved in certain oversight committees, he has elected to personally resolve this matter by settling with no admission or denial of wrongdoing," according to a statement from Tortoise. "Tortoise had no involvement in this incident and maintains our confidence in and support for Mr. Beman."
In a statement, Aegon USA said, "While the models at issue are no longer in use, we recognize we must do better, and we have taken steps to enhance our policies, procedures and disclosure processes."