Vanguard fined for providing misleading account statements to customers

By Jaiveer Shekhawat

(Reuters) – Vanguard Group, the world’s largest mutual fund issuer, has been fined and censured by the Financial Industry Regulatory Authority (FINRA) for errors appearing in about 8.5 million customer account statements .

FINRA, Wall Street’s self-regulatory body, said in a filing signed last month by representatives of both parties that Vanguard overestimated the projected yield and expected annual income for nine money market funds from November 2019 to September 2020. She ordered Vanguard to pay an $800,000 fine.

“From October 2019 to at least June 2021, certain VMC account statements misrepresented market appreciation/depreciation and investment returns,” the filing said.

The regulator said Vanguard “accepts and consents” without admitting or denying the findings and that the penalties will take effect at a later date to be determined by FINRA.

“Vanguard Marketing Corporation takes its regulatory obligations seriously and the company is pleased to have resolved this issue,” a Vanguard spokesperson said.

FINRA said a technical glitch caused the errors and added that it did not affect actual customer returns.

Vanguard finally fixed the errors in May and June 2021.

After FINRA began its investigation, Vanguard reported to regulator staff that other errors affected the presentation of certain account statements, according to the filing.

(Reporting by Jaiveer Singh Shekhawat in Bengaluru and Jonathan Stempel in New York; Editing by Krishna Chandra Eluri)

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