Vanguard will pay 106 million dollars in return to pension investors

Vanguard, the big money firm, has agreed to pay $106 million in restitution to settle a regulatory investigation into whether the firm misled retail investors about the tax implications of changes in some of their pension funds.

The Securities and Exchange Commission announced the deal on Friday along with a flurry of other deals it reached with companies in Gary Gensler’s final days as SEC chairman. He will officially step down on Monday.

The settlement with Vanguard is part of a series of investigations led by New York, New Jersey and Connecticut along with other regulatory agencies.

Vanguard’s joint investigation failed to notify some investors of changes to certain provisions of their retirement funds. These changes led to higher capital gains taxes for hundreds of thousands of investors who kept their money in taxable accounts. In New York alone, Vanguard’s failure to disclose the changes led to more than 15,000 residents paying higher than expected, according to the New York attorney general’s office.

Vanguard, in an agreement with regulators, neither admitted nor denied wrongdoing, but was blocked by the SEC.

The regulator said the misleading statements were made in the 2020 and 2021 prospectus for the Vanguard Investor Target Retirement Funds. The company has been accused of failing to tell retail investors about changes in fund terms that prompted institutional investors to move their money to other funds and caused retail investors who did not moved his money to hit “historically bigger gains.”

The 106 million dollars will be placed in a fund to be distributed to the affected investors. The SEC said the money is in addition to a $40 million settlement that Vanguard has reached with investors in a lawsuit over related actions.

Vanguard spokesman Netanel Spero said the company, which has more than 50 million investors, is “pleased to have reached this agreement.”

SEC commissioners met Thursday to approve Vanguard and other cities — the last time regulators will hold such meetings with Mr. Gensler at the helm. He has said he will step down after President-elect Donald J. Trump is inaugurated.

Mr. Trump nominated Paul Atkins, a pro-business conservative and former SEC commissioner, to lead the agency. His nomination hearing has not yet been scheduled.

Here are three other patterns announced by the SEC over the past two days:

• Two Sigma, a hedge fund, paid $165 million in restitution and agreed to pay $90 million in civil penalties to resolve an investigation into allegations that the firm took four years to fix problems with two of its models it relied on to to make investment decisions. (The company previously paid a portion of the refund.) The problems were discovered by two employees at the firm, which manages about $60 billion for investors.

• GrubMarket, an e-commerce company that delivers organic food, has agreed to pay $8 million in fines to settle an investigation after the SEC found that the privately held company understated its long-term revenue by up to $550 million. The SEC said the company raised $80 million from investors in a special offering that included excessive earnings.

• LPL Financial, a brokerage and investment firm, has agreed to pay an $18 million penalty to the SEC to resolve an investigation into allegations that the firm did not act quickly enough to address problems with its anti-money laundering program. . The SEC found that the company did not close accounts promptly when it was unable to verify customer information.

In all cases, the companies settled with the commission without admitting or denying wrongdoing.