Retail investors in target retirement funds faced higher tax liabilities as a result, the SEC said
Vanguard agreed to pay $106.4 million to the Securities and Exchange Commission Friday to settle charges for “misleading statements” connected to its target retirement funds that resulted in higher taxes for retail investors, the regulator said.
Vanguard — one of the largest retirement fund providers in the U.S. — offered two separate groups of target retirement funds (TRFs): Investor TRFs for investors with assets of less than $100 million, and Institutional TRFs for institutional investors, according to the SEC’s order.
The firm allegedly lowered the minimum initial investment amount for its Vanguard Institutional Target Retirement Funds to $5 million, from $100 million in December 2020. That resulted in a spike in demand for redemptions.