Wall Street Journal: Vanguard Ordered to Pay $6 Million Settlement to Massachusetts Investors

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An investigation launched earlier this year regarding adjustments that Vanguard made to its target-date funds revealed that the Malvern-based investment giant must now pay a $6 million settlement to Massachusetts investors who were slammed with tax bills, write Caitlin McCabe and Jason Zweig for the Wall Street Journal. 

These target-date funds include stocks, bonds, and cash whose prices soar as investors near retirement. Massachusetts regulators reviewed how Vanguard marketed these funds, finding that the company had not made it clear how much investors could be taxed. 

One investor, who has holdings in Vanguard’s Target Retirement 2035 fund, said he was hit with an unexpected $150,000 tax bill in 2021.

The settlement requires Vanguard to set up a $5.5 million restitution account and take care of $750,000 in costs for the state and its investors. 

William Galvin, the Massachusetts secretary of the commonwealth, said that the company “surely had a duty to warn their investors that they could have an increased tax liability because of Vanguard’s action.” 

Read more about the settlement in the Wall Street Journal. 

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