SANTA FE — Today, the New Mexico Securities Division, as part of a task force of state securities regulators and the U.S. Securities and Exchange Commissions (SEC), announced a $106 million settlement with Vanguard Marketing Corporation 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 SEC will notify the New Mexico investors that were impacted by this action and will administer the remediation payments, through its Fair Fund program, to compensate investors for the capital gains taxes.  

The settlement stems from a three-year multistate task force investigation coordinated through the North American Securities Administrators Association’s Enforcement Section Committee and a concurrent investigation by the SEC.  

The investigation revealed that in 2020, Vanguard lowered the investment minimums and fees for its Institutional Target Retirement Funds (TRFs). As a result of the lowered investment minimums, a large number of retirement 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 resulted in significant capital gains taxes for hundreds of thousands of retail investors who remained invested in the Investor TRF.  Vanguard did not disclose potential capital gains and tax consequences to Investor TRF shareholders.  

If you have questions or concerns about your investments or financial professional, please contact the New Mexico Securities Division at 505-476-4580.