RELEASE: New Mexico joins $106 million settlement with Vanguard over big tax bills
FOR IMMEDIATE RELEASE
January 28, 2025
Contact: Andrea Brown
andrea.brown@rld.nm.gov
New Mexico joins $106 million settlement with Vanguard over big tax bills
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.
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ABOUT NMRLD:
The New Mexico Regulation and Licensing Department regulates more than 400,000 individuals and businesses in 35 industries, professions, and trades across the state. Its goal is to assure that New Mexicans receive quality services from qualified individuals and businesses while also ensuring a fair and prompt administrative process.
Andrea Brown | Communications Director
Office of the Superintendent
5500 San Antonio Dr NE | Albuquerque, NM 87109
Andrea.Brown@rld.nm.gov | www.rld.nm.gov
(505) 819-1822
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