The SEC announced today that Vanguard will pay more than $106 million to settle charges against it. The charges allege that Vanguard made misleading statements to investors regarding the retirement funds.
Funds received from this settlement will be distributed to affected investors.
SEC legal battle with Vanguard
Vanguard, an American investment group, has clashed with the SEC and its regulatory measures. The company hasn’t had many run-ins with the SEC in recent years.
Although it is a major ETF issuer, it has generally avoided crypto ETFs. The SEC’s approval of Ethereum ETFs also hasn’t changed the equation for the company.
However, this situation is changing. In a press release, the SEC claimed that Vanguard deliberately misled investors about several key elements of its Target Institutional Retirement Funds (TRFs).
As a result, some investors faced huge tax liabilities and diminished returns. Vanguard settled the charges and agreed to pay a huge fine.
“Materially accurate information about capital gains and tax implications is essential to investors saving for retirement. Companies must ensure that they accurately describe to investors the potential risks and consequences associated with their investments,” said Corey Schuster, chief of the Enforcement Division’s Asset Management Unit.
It is particularly interesting that the SEC settled the Vanguard case today, knowing that it will soon undergo sweeping changes. Its chairman, Gary Gensler, will resign this weekend and the SEC will subsequently slow down its major crypto prosecutions.
Earlier today, the agency fined DCG in what was potentially Gensler’s final enforcement as SEC chairman.
However, this same dynamic may not play out between the SEC and Vanguard. Vanguard is a major investment bank, and with growing institutional acceptance, it has significant crypto connections..
Its current CEO even led BlackRock’s efforts to launch a Bitcoin ETF. However, competitors like BlackRock have become fully committed to crypto over the past year.
That is, the company avoided crypto ETFs, thereby cutting off access to a billion-dollar market. This is the important dilemma between Vanguard and the SEC: How will the Commission’s crypto cooling impact this?
This alleged infraction has little to do with the industry, but Gary Gensler is still in charge. It’s unclear what the SEC will do after he leaves.
In other words, this settlement could provide an important test for the agency. If there are no further disagreements between the SEC and Vanguard in the near future, this could indicate that the company falls under blanket amnesty.
However, if the SEC under Paul Atkins pursues another battle, it will show that these limited crypto connections will not prevent future scrutiny.
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