Securities

State Securities Regulators Reach Settlement with Vanguard

**TRENTON, NJ** – The Office of the Attorney General, Division of Consumer Affairs, and Bureau of Securities have announced that New Jersey is part of a $106 million settlement with Vanguard Marketing Corporation and The Vanguard Group, Inc. This settlement involves Vanguard’s failure to supervise registered persons and disclose tax consequences after changes in investment minimums for target date retirement funds.

The settlement follows a three-year investigation by a multistate task force under the North American Securities Administrators Association (NASAA), co-led by New Jersey, Connecticut, and New York. The investigation ran parallel to a similar inquiry by the U.S. Securities and Exchange Commission (SEC).

Vanguard initially offered Institutional and Investor Target Retirement Funds with differing investment minimums. In December 2020, the minimum for Institutional TRFs dropped from $100 million to $5 million, leading many investors to redeem Investor TRF shares for Institutional TRF shares. This shift triggered capital gains taxes for hundreds of thousands of investors in the Investor TRFs, which Vanguard did not disclose.

The SEC will use its Fair Fund program to compensate the affected investors. Vanguard Group, Inc., the parent company of VMC, has not admitted or denied any