National investment fraud lawyers KlaymanToskes encourages Vanguard Target Date Fund investors to immediately contact our firm to discuss recovery options following major tax bills caused by Vanguard’s negligence.
Vanguard’s Target-Date Funds, designed to be conservative, left investors with millions in tax liabilities following Vanguard’s changes to the funds. The target date funds were separated into two categories: one for institutional investors with more than $100 million, and a second for smaller retail investors. In December 2020, Vanguard changed their minimum for the institutional funds from $100 million to $5 million. As institutional investors already paid lower fees than retail investors, many retirement plans with more than $5 million switched from standard to institutional funds.
As larger retail investors flocked to the institutional funds, thousands of smaller, standard fund investors were left to pay the redistributed capital gains tax. Many of these investors held the funds in taxable accounts, leaving them with millions in exorbitant tax bills.
Vanguard could have lowered the fees for ordinary retail investors or combined it with the institutional funds, but did not attempt to do so until September 2021, nearly a year after changing its system, and after many investors had already incurred significant tax bills.
According to securities attorney Lawrence L. Klayman, Esq., “Vanguard had a responsibility to alert its retail investors that they would face high capital gains taxes. Vanguard’s negligence leaves them liable for the damages.”
In July, 2022, the state of Massachusetts settled its lawsuit against Vanguard for $6.25 million to resolve regulatory violations of failing to inform customers that they would face extraordinary tax bills. Over 5,000 investors in the state will receive their share of the $5.5 million payout, with the remaining $750,000 being received by the state itself. The firm is currently facing a related lawsuit in the state of Pennsylvania on the behalf of individuals who invested in Vanguard Target-Date Funds and incurred exorbitant capital gains taxes. While KlaymanToskes applauds the state of Massachusetts for taking action, it is our opinion that this settlement is nominal.
Securities attorney Lawrence L. Klayman continues, “The $6.25 million is unlikely a significant settlement as 5,000 people are sharing the payout. The goal is to make investors whole, meaning the Massachusetts settlement falls short. Massachusetts investors as well as investors from all other 49 states should definitely pursue a financial recovery through arbitration.”
Investors that suffered significant tax burdens as a result of investing in Vanguard’s Target Date Funds should contact KlaymanToskes immediately to discuss financial recovery options.
Attorney Lawrence L. Klayman is prepared to speak with you. He can be reached at (888) 997-9956 or lklayman@klaymantoskes.com.
If you own any of the following Vanguard Retirement Funds, contact KlaymanToskes to discuss recovery options for your tax bill:
KlaymanToskes is a leading national securities law firm which practices exclusively in the field of securities arbitration on behalf of retail and institutional investors throughout the world in large and complex securities matters. The firm has recovered over $250 million in FINRA arbitrations and over $350 million in other securities litigation matters. KlaymanToskes has office locations in California, Florida, New York, and Puerto Rico.
Contact
KlaymanToskes, P.A.
Lawrence L. Klayman, Esq.
888-997-9956
lklayman@klaymantoskes.com
www.klaymantoskes.com