The Securities and Exchange Commission (SEC) penalized Vanguard for failing to adequately disclose the potential impact of changes to minimum investment requirements for its institutional target date funds. The SEC found that the changes led to large taxable distributions for remaining investors in the retail share class, resulting in a financial disadvantage.
Asset management giant Vanguard has been fined more than $100 million to settle charges related to disclosures around target date investment funds, the Sec urities and Exchange Commission announced Friday. The alleged violations stem from a 2020 change where Vanguard lowered the minimum investment requirement for its institutional target date funds .
Typically, this is done by replacing riskier stocks with higher exposure to income-generating bonds as the retirement date nears. The fine highlights how investors can see large tax bills even when they themselves do not make any asset sales during a calendar year.
INVESTMENT FUNDS SEC TAXES VANGUARD TARGET DATE FUNDS
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