Hartford Financial Services Inc. agreed to pay $115 million to settle charges in Connecticut, New York and Illinois that it profited from market-timing trades and inflated insurance quotes to brokers.
Market-timing trades involve the rapid-fire purchase and sale of securities, allowing traders to capture gains by exploiting the inefficiency of market ticker boards.
The Hartford is paying $84 million to investors, which will be paid into a fund to compensate certain holders of variable annuities with The Hartford between 1998 and 2003.
The company said it now monitors trading frequency and enforces limitations.
The state of New York, which led the investigation, is to receive $20 million, while Connecticut and Illinois are to receive $3 million each.
The Securities and Exchange Commission announced it concluded a related investigation without taking any action.
Of the total settlement amount, $5 million will be paid into a fund to compensate commercial property-casualty policyholders for instances of improper rate quotes between 2001 and 2004.
“The Hartford failed to act swiftly and strongly to stop and disclose market timing, despite its duty to do so,” said Connecticut Attorney General Richard Blumenthal in a prepared statement. “The inadequate response was primarily a corporate failing, not an individual responsibility … While market timing cost investors millions in lost profits, it generated millions in fees for The Hartford.”
