By Sabela Ojea


Vanguard will pay $106.4 million in restitution to investors to resolve charges brought by the Securities and Exchange Commission after the asset manager allegedly failed to notify investors of changes to its retirement funds.

According to the SEC's findings, the lack of notifications drove higher capital gains tax bills for many retail investors, the agency said on Friday.

Vanguard said it was pleased it reached an agreement with the SEC.

"We're 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.

In December 2020, Vanguard lowered the minimum amount required to invest in its Institutional Target Retirement to $5 million from $100 million. As a result, many investors sold their Investor TRF shares to purchase Institutional TRF shares, which resulted in significant capital gains taxes for hundreds of retail investors who relied on the Investor TRFs.

"Materially accurate information about capital gains and tax implications is critical to investors saving for their retirements," said Corey Schuster, head of the division of enforcement's asset management unit.

Without admitting or denying the SEC's findings, Vanguard agreed to pay $18.2 million in disgorgement and prejudgment interest that will be deemed satisfied by the payment of $92.91 million in relief ordered by the states' settlements and a $13.5 million civil penalty.

The settlement also resolves settlements of parallel investigations of Vanguard announced by the New York Attorney General's Office, the Connecticut Department of Banking, and the New Jersey Office of the Attorney General.


Write to Sabela Ojea at sabela.ojea@wsj.com


(END) Dow Jones Newswires

01-17-25 1315ET