Vanguard Settles $106 Million SEC Case Over Retirement Fund Tax Disclosures

The settlement addresses allegations that Vanguard failed to warn investors about tax implications tied to changes in its target-date retirement funds.

Vanguard agreed to pay $106.4 million to resolve SEC charges and parallel investigations by state regulators in New York, New Jersey, and Connecticut.
The charges stem from Vanguard's 2020 decision to lower the minimum investment for its institutional target-date funds, causing significant tax liabilities for retail investors who remained in taxable accounts.
The SEC found that retail investors faced increased capital gains distributions and missed out on potential compounding growth due to inadequate disclosures by Vanguard.
The settlement includes $92.91 million in restitution for affected investors and a $13.5 million civil penalty, with funds to be distributed by the SEC.
Vanguard, which neither admitted nor denied the allegations, stated its commitment to supporting its 50 million investors and maintaining trust in its services.