NJ’s Trenton New Jersey is a party to a $106 million settlement with Vanguard Marketing Corporation and The Vanguard Group, Inc., according to the Office of the Attorney General, Division of Consumer Affairs, and Bureau of Securities. Vanguard’s failure to oversee registered individuals and notify them of the tax ramifications after modifications to the investment minimums for target date retirement funds is the subject of this settlement.
The settlement comes after a three-year investigation by a multistate task force led by New Jersey, Connecticut, and New York under the auspices of the North American Securities Administrators Association (NASAA). The U.S. Securities and Exchange Commission (SEC) conducted a similar probe concurrently with the investigation.
Institutional and Investor Target Retirement Funds with varying investment minimums were initially available from Vanguard. Many investors redeemed their Investor TRF shares for Institutional TRF shares as the minimum for Institutional TRFs decreased from $100 million to $5 million in December 2020. For hundreds of thousands of investors in the Investor TRFs, this change resulted in capital gains taxes, which Vanguard failed to report.
