(Bloomberg) — Vanguard Group will pay more than $106 million to settle allegations by the U.S. Securities and Exchange Commission that it made misleading statements about the distribution of capital gains and the tax consequences for retail investors who held popular pension funds in taxable accounts.
Most read by Bloomberg
The firm announced in December 2020 that it would lower the minimum initial investment for its Vanguard Institutional Target Retirement Funds. The SEC alleges that to meet demand, another pension fund, Vanguard, had to sell underlying assets with gains as financial markets rebounded from pandemic-induced lows.
As a result, small investors in Vanguard Investor Target Retirement Funds who continued to hold their shares in taxable accounts faced historically higher capital gains distributions and tax liabilities, the agency said.
“Materially accurate information about capital gains and tax implications is critical for investors saving for their retirement,” Corey Schuster, head of the SEC’s Asset Management Division of Enforcement, said in a statement. “Companies must ensure that they accurately describe to investors the potential risks and consequences associated with their investments.”
The settlement will be distributed to affected investors through a fair fund, the SEC said.
“Vanguard is committed to supporting the more than 50 million everyday investors and retirement savers who entrust us with their savings. We are pleased to have reached this settlement and look forward to continuing to serve our investors with world-class investment options,” the company said in a statement.
(Updates with details.)
Most read from Bloomberg Businessweek
©2025 Bloomberg LP
