INDIANAPOLIS - (February 13, 2025) –  Indiana Secretary of State Diego Morales announced today that the Indiana Securities Division has joined other securities regulators in a $106 million settlement with Vanguard Marketing Corporation (VMC) and The Vanguard Group, Inc. (Vanguard) for failing to supervise investors and disclose possible tax consequences to retirement fund investors.

The settlement stems from a three-year multistate task force investigation coordinated through the North American Securities Administrators Association who investigated in parallel with the U.S. Securities and Exchange Commission (SEC). Settlement funds will be used to provide restitution payments to harmed investors and will be administered by the SEC. Hooser investors who were harmed will need to apply to the SEC Fair Fund for compensation.

The investigation revealed that in 2020, Vanguard lowered the investment minimums for its Institutional Target Retirement Funds (TRFs). As a result of the lowered investment minimums, a large number of retirement plan investors redeemed their Investor TRF shares to purchase Institutional TRF shares.  The large number of redemptions caused Vanguard to sell highly appreciated assets in the Investor TRF, which triggered significant capital gains taxes for hundreds of thousands of retirement investors who remained invested in the Investor TRF.  Vanguard did not disclose the potential capital gains and tax implications to Investors. 

“This settlement shows how important it is for state regulators to work with our federal partners in protecting Hoosier investors. Hoosiers deserve transparency and fairness in their investments so that their hard-earned money is not spent in unexpected taxes,” said Diego Morales, Indiana Secretary of State.

“Deciding how to invest for retirement is one of the most consequential financial decisions a person can make.  Hoosier investors need to have full disclosure of investment risks and tax consequences before making investment decisions,” said Marie Castetter, Indiana Securities Commissioner. 

The Vanguard Group, Inc. is the parent company of Vanguard Marketing Corporation, a FINRA- and state-registered broker-dealer. The SEC will notify the investors that were affected by this action and will administer the remediation payments, through its Fair Fund program, to compensate investors for the capital gains taxes. If you have concerns about your investments or dealings with a financial professional, please contact the Indiana Securities Division at 317-232-6681.

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