WASHINGTON, D.C., November 8 – Three subsidiaries of The Hartford Financial Services Group, Inc. will pay $55 million to settle charges that they misrepresented and failed to disclose to fund shareholders and the funds boards of directors their use of fund assets to pay for the marketing and distribution of Hartford mutual funds and annuities, according to the Securities and Exchange Commission.

The three subsidiaries are Hartford Investment Financial Services, LLC; HL Investment Advisors, LLC; and Hartford Securities Distribution Company, Inc. The commission said that the subsidiaries agreed to relinquish $40 million in ill-gotten gains, and pay a $15 million penalty. The entire $55 million will be distributed to the affected Hartford funds.

According to an order issued by the commission, between 2000 and 2003, The Hartford entered into arrangements with 61 broker-dealers, and agreed to pay for special marketing and distribution benefits, known as shelf space. The commission asserted that The Hartford represented to shareholders in the funds prospectuses that it used its own assets to pay for shelf space, and that shareholders did not pay, however The Hartford directed approximately $51 million of the funds assets, in the form of brokerage commissions, to certain broker-dealers in order to satisfy shelf space obligations.

The Hartford also failed to disclose the practice to the funds boards.

Linda Thomsen, director of the commissions Division of Enforcement, said, Hartford told the fund investors that shareholders would not pay for the marketing and distribution of fund shares, but then used the funds assets rather than Hartfords own assets to meet its shelf space obligations. Such misrepresentations cannot be tolerated. Our action today sends a strong message about the importance of providing proper disclosure to fund Boards and fund investors.

Ramani Ayer, chairman and chief executive officer of The Hartford, said in a statement, It was important to our company to have this matter resolved.The Hartford stopped using this practice at the end of 2003.The commission has had our complete cooperation during this investigation.

He noted that The Hartford has also formed a disclosure review committee to ensure that prospectuses and all other disclosures for investment products are accurate, complete and timely.