DOBS Joins $106 Million Multi-State Settlement with Vanguard

<b>Harrisburg, PA – </b>Today, the <b>Pennsylvania Department of Banking and Securities (DoBS)</b> announced that it joined a multi-state settlement with state regulators and the United States Securities and Exchange Commission (SEC) in a $106 million settlement with Vanguard Marketing Corporation (VMC) and The Vanguard Group, Inc. (Vanguard) for failing to supervise certain registered persons and failing to disclose potential tax consequences to investors following a change in investment minimums for certain target date retirement funds.<br>\r\n <br>\r\nThe settlement stems from a three-year multi-state task force investigation coordinated through the North American Securities Administrators Association’s Enforcement Section Committee, to conduct a comprehensive investigation, parallel to a concurrent investigation by the SEC.</p>\r\n<p> Vanguard lowered the investment minimums for its Institutional Target Retirement Funds (TRFs) in 2020. As a result, a large number of retirement plan investors redeemed their Investor TRF shares to purchase Institutional TRF shares. These transactions triggered significant capital gains taxes for hundreds of thousands of retail investors. 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 retail investors who remained invested in the Investor TRF. Vanguard did not disclose the potential capital gains and tax implications to Investor TRF shareholders which was a consequence of the migration of shareholders from the Investor TRF to the Institutional TRF.&nbsp;</p>\r\n<p>Harmed investors will be notified by the SEC and will receive remediation payments through its Fair Fund. Investors need not take any action at this time. View the SEC press release <a href=\"https://www.sec.gov/newsroom/press-releases/2025-21\">here</a>.</p>\r\n<p><b>MEDIA CONTACT:&nbsp;</b>Joan Z. Nissley,&nbsp;<a href=\"mailto:jnissley@pa.gov\">jnissley@pa.gov</a></p>\r\n<p style=\"text-align: center;\"># # #</p>\r\n"}}">

Harrisburg, PA – Today, the Pennsylvania Department of Banking and Securities (DoBS) announced that it joined a multi-state settlement with state regulators and the United States Securities and Exchange Commission (SEC) in a $106 million settlement with Vanguard Marketing Corporation (VMC) and The Vanguard Group, Inc. (Vanguard) for failing to supervise certain registered persons and failing to disclose potential tax consequences to investors following a change in investment minimums for certain target date retirement funds.

The settlement stems from a three-year multi-state task force investigation coordinated through the North American Securities Administrators Association’s Enforcement Section Committee, to conduct a comprehensive investigation, parallel to a concurrent investigation by the SEC.

Vanguard lowered the investment minimums for its Institutional Target Retirement Funds (TRFs) in 2020. As a result, a large number of retirement plan investors redeemed their Investor TRF shares to purchase Institutional TRF shares. These transactions triggered significant capital gains taxes for hundreds of thousands of retail investors. 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 retail investors who remained invested in the Investor TRF. Vanguard did not disclose the potential capital gains and tax implications to Investor TRF shareholders which was a consequence of the migration of shareholders from the Investor TRF to the Institutional TRF.

Harmed investors will be notified by the SEC and will receive remediation payments through its Fair Fund. Investors need not take any action at this time. View the SEC press release here.

MEDIA CONTACT: Joan Z. Nissley, jnissley@pa.gov

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