
OAG: Investment group must repay investors for unannounced tax-liability changes to retirement accounts

NATIONWIDE — AN INVESTMENT ADVISORY FIRM must now pay New York State $106 million for failing to notify its investors about changes to retirement funds that made them liable for higher capital gains taxes. New York Attorney General Letitia James and a bipartisan, multistate coalition of 45 securities regulators, together with the Securities and Exchange Commission on Friday, Jan. 17, secured $106 million from Vanguard Group, Inc., an investment advisory firm, and its subsidiary Vanguard Marketing Corporation. The settlement follows Vanguard’s failure to notify investors of changes to its retirement funds that resulted in higher capital gains tax bills for hundreds of thousands of investors. An investigation by the Office of the Attorney General determined that Vanguard had lowered the minimum requirements on one of its retirement funds without telling investors that the changes would result in higher tax bills. More than 15,000 New York investors were forced to pay capital gains taxes on their retirement accounts, which were exponentially higher because of those undisclosed changes. Consequently, Vanguard will pay $106 million in restitution to hundreds of thousands of investors.
Leading the bipartisan coalition were New York, Connecticut, New Jersey, and the Securities and Exchange Commission.
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