Vanguard fined more than $100 million by SEC over violations involving target date retirement funds

Asset management giant Vanguard has been fined more than $100 million to settle charges related to disclosures around target date investment funds, the Securities and Exchange Commission announced Friday.

The violations stem from a 2020 change where Vanguard lowered the minimum investment requirement for its institutional target date funds. The SEC order found that the change spurred redemptions as Vanguard customers moved from other target date funds into the institutional versions, creating taxable distributions for some of the remaining shareholders. The SEC said Vanguard failed to properly disclose the nature of those distributions.

"The order finds that, as a result, retail investors of the Investor TRFs who did not switch and continued to hold their fund shares in taxable accounts faced historically larger capital gains distributions and tax liabilities and were deprived of the potential compounding growth of their investments," the SEC said in a press release.

Vanguard is one of the world's largest asset managers, reporting more than $10 trillion of assets as of last November. The firm was founded by Jack Bogle in the 1970s and has a reputation as a low-cost, investor friendly firm.

"Vanguard is committed to supporting the more than 50 million everyday investors and retirement savers who entrust us with their savings. We're pleased to have reached this settlement and look forward to continuing to serve our investors with world-class investment options," Vanguard said in a statement.

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