Some Mississippi residents could receive a portion of a $106 million, multi-state settlement with investment company Vanguard.
The settlement spurred from a lawsuit that claimed the company did not disclose certain tax implications of profits from its retirement fund. More than 40 states were involved in the lawsuit.
Mississippi Secretary of State Michael Watson said Friday that he was a part of the task force of state securities regulators and the U.S. Securities and Exchange Commission (SEC) in the settlement. The group partnered to investigate the Pennsylvania-based investor corporation for neglecting to disclose tax consequences to consumers, leading to investors having to pay higher capital gains taxes.
“I continue to stand amazed at the diligent and persistent hard work of our Securities team,” Watson said. “Through their attention to detail and public service to Mississippians, our citizens may rest assured their hard-earned dollars are protected.”
The investigation by the multi-state task force and the SEC spanned three years. Officials say it revealed Vanguard lowered the investment minimum for its Institutional Target Retirement Funds (TRFs) from $100 million to $5 million. Because of the lowered minimums, many investors redeemed Investor TRF shares to purchase Institutional TRF shares.
Due to the wave of redemptions, Vanguard sold highly appreciated assets in the Investor TRF, triggering significant capital gains for hundreds of thousands of retail investors who remained invested in the Investor TRF. The investigation alleged that Vanguard did not notify investors of the taxes owed after the realized capital gains.
Officials added the SEC will notify investors who were impacted and compensate them through the Fair Fund program. It has not been announced how much investors could get or when they will be compensated.
