Finra fines Vanguard $800,000 for misleading information on money market accounts

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GP813
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Re: Finra fines Vanguard $800,000 for misleading information on money market accounts

Post by GP813 »

But they have a new logo! A logo that reminds me of that bad miniseries V from the early 80's, so there's that.
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arcticpineapplecorp.
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Re: Finra fines Vanguard $800,000 for misleading information on money market accounts

Post by arcticpineapplecorp. »

chinchin wrote: Tue May 30, 2023 12:32 am
Silence Dogood wrote: Mon May 29, 2023 10:25 pm
arcticpineapplecorp. wrote: Mon May 29, 2023 11:55 am
Silence Dogood wrote: Mon May 29, 2023 11:02 am Is Vanguard required to notify those who received inaccurate statements?

How can I determine if my statements are inaccurate?
weren't all the accounts identified unless you fall into the third error made regarding corporate actions which affected an "unknown number of accounts":
One occurred when customer contributions to an account were identified as an increase in market value instead of a cash deposit. This error affected approximately 23,000 statements from October 2019 to June 2021.

Another misstep involved reflecting margin credits and debits as market appreciation or depreciation. That snafu affected 57,000 statements between October 2019 and June 2021.

The firm also inaccurately report “corporate actions,” such as stock splits, which affected the investment return reporting for an unknown number of accounts.

The errors didn’t affect the market yield paid to customers nor the holdings information displayed on their statements, according to the Finra order.
I'm sorry - I don't understand your response.

To reiterate, I'm wondering if Vanguard specifically notified those who were provided inaccurate statements.

For example, I download my statements once they are made available. If those statements are inaccurate, would Vanguard have notified me? Should I re-download my statements from this time period?
VG doesn't know how many customers were affected ("unknown number of accounts) so they have no way of notifying all of them.
that's not entirely correct. They don't know how many customers that had "corporate actions" were affected.

they do know that 23,000 statements were affected "when customer contributions to an account were identified as an increase in market value instead of a cash deposit."

they do know that 57,000 statements were affected "reflecting margin credits and debits as market appreciation or depreciation."

whether or not they contacted these customers with these known affected statements is unknown (the article doesn't state whether these customers were notified or not).
It's hard to accept the truth when the lies were exactly what you wanted to hear. Investing is simple, but not easy. Buy, hold & rebalance low cost index funds & manage taxable events. Asking Portfolio Questions | Wiki
bondsr4me
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Re: Finra fines Vanguard $800,000 for misleading information on money market accounts

Post by bondsr4me »

z3r0c00l wrote: Tue May 30, 2023 9:07 am Always amused by the size of fines in the industry. 30 million+ customers, 7.2 trillion AUM, but this $800,000 will surely change their behavior!
:sharebeer
bondsr4me
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Re: Finra fines Vanguard $800,000 for misleading information on money market accounts

Post by bondsr4me »

bondsr4me wrote: Tue May 30, 2023 11:21 am
z3r0c00l wrote: Tue May 30, 2023 9:07 am Always amused by the size of fines in the industry. 30 million+ customers, 7.2 trillion AUM, but this $800,000 will surely change their behavior!
:sharebeer
fines directed towards the officers should be levied and made public.
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Re: Finra fines Vanguard $800,000 for misleading information on money market accounts

Post by sschullo »

JackoC wrote: Sat May 27, 2023 6:23 pm
ResearchMed wrote: Sat May 27, 2023 3:35 pm
exodusing wrote: Sat May 27, 2023 3:29 pm
Finra fines Vanguard $800,000 for misleading information on money market accounts

The firm miscalculated annual yield and income for nine funds on approximately 8.5 million statements. It also failed to act promptly when customers noticed something was wrong.
https://www.investmentnews.com/finra-fi ... nts-238099

Wonderful. (not)

So... IF the fund owners "own" Vanguard, who is actually paying this fine?
Where is that money coming from? Presumably not "corporate profits"...
For such a tiny number it's hard to say, cuts in bonuses to people responsible could amount to $800k. But it's trivial spread over multi-$trillion assets under management anyway.
Reminds me of back in the day when the IRS audit found a grand total of $2000 of over contributions in LAUSD, now 3 billion in 403(b) assets. Allow me to repeat, $2000 from a sample of 900 employees as they could not audit all contributing employees.

I look the other way when things like this happen to Vanguard because I stay the course and withdraw funds to rebalance and support my retirement. For that simple process, Vanguard is wonderful. The minute you ask for more, as some people complain about Vanguard, those folks are probably in the wrong company. I know I have been in the right company for the last 20 years and will never change to another.
Never in the history of market day-traders’ has the obsession with so much massive, sophisticated, & powerful statistical machinery used by the brightest people on earth with such useless results.
DesertGator
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Re: Finra fines Vanguard $800,000 for misleading information on money market accounts

Post by DesertGator »

Someone in this thread said "Vanguard is Wonderful."

I disagree. I like their products; I don't like or trust the company. In fact, I am speaking with them today for the final time about their negligent handling of an outbound rollover and missing funds in six figures. I'm almost certainly filing a FINRA complaint today, and discussing the matter with an attorney tomorrow.
Last edited by DesertGator on Tue May 30, 2023 12:02 pm, edited 1 time in total.
Clarky
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Re: Finra fines Vanguard $800,000 for misleading information on money market accounts

Post by Clarky »

sschullo wrote: Tue May 30, 2023 11:33 am
JackoC wrote: Sat May 27, 2023 6:23 pm
ResearchMed wrote: Sat May 27, 2023 3:35 pm
exodusing wrote: Sat May 27, 2023 3:29 pm
Finra fines Vanguard $800,000 for misleading information on money market accounts

The firm miscalculated annual yield and income for nine funds on approximately 8.5 million statements. It also failed to act promptly when customers noticed something was wrong.
https://www.investmentnews.com/finra-fi ... nts-238099

Wonderful. (not)

So... IF the fund owners "own" Vanguard, who is actually paying this fine?
Where is that money coming from? Presumably not "corporate profits"...
For such a tiny number it's hard to say, cuts in bonuses to people responsible could amount to $800k. But it's trivial spread over multi-$trillion assets under management anyway.
Reminds me of back in the day when the IRS audit found a grand total of $2000 of over contributions in LAUSD, now 3 billion in 403(b) assets. Allow me to repeat, $2000 from a sample of 900 employees as they could not audit all contributing employees.

I look the other way when things like this happen to Vanguard because I stay the course and withdraw funds to rebalance and support my retirement. For that simple process, Vanguard is wonderful. The minute you ask for more, as some people complain about Vanguard, those folks are probably in the wrong company. I know I have been in the right company for the last 20 years and will never change to another.
Well said.
Clarky
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Re: Finra fines Vanguard $800,000 for misleading information on money market accounts

Post by Clarky »

water2357 wrote: Mon May 29, 2023 9:36 pm I reviewed more of the Dashboard "Performance" data on the Vanguard website.

It is all garbage.

And I mean the actual numbers for account balances, deposits/withdrawals, gain/loss, dividends, interest, etc. No matter what time period, no matter what account/asset, etc.

There is not one piece of accurate data available through that reporting mechanism. Not even for the most recent month. It is like they just threw a bunch of numbers up in the air and filled in all the information with whatever landed in that data field.

Vanguard should remove "Performance" reporting from the website, it is all misinformation.

If Vanguard is putting out bad "Performance" data on their website, what else is wrong?

Does FINRA require Vanguard to accurately report transactions, earnings, account balances, share prices, etc.?

When should/can an account holder complain to FINRA, if there are only very limited requirements to report account information accurately?
It’s not all garbage. For the love of God…
Clarky
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Re: Finra fines Vanguard $800,000 for misleading information on money market accounts

Post by Clarky »

water2357 wrote: Mon May 29, 2023 1:00 am I track all of my Vanguard investments, transactions, gains/losses, dividends, rates of return per investment, etc., calculate everything myself. I make sure the on line posted balances agree with all transactions, income, gain/loss, share prices, etc. So, I had not looked at Vanguard's "Performance" information closely for awhile.

This posting caused me to look. And Vanguard's "Performance" info is a total mess. I don't know if this just happened the other day when Vanguard added the "Dashboard" to their website information or if it's just been a mess like everything else on the Vanguard website since last summer.

If I'm missing something, please enlighten me, but how can the ending balance for Vanguard's "Performance" info be 40% higher than the actual ending balance's asset value for the same ending date?

All assets are held by Vanguard, I read their caveats, there is nothing that applies, the accounts are not that complicated. The additional asset value does not correspond to any combination of assets that I can determine.

So, what is Vanguard attempting to present as an ending value for "Performance" information that would be 40% higher than the accounts' actual ending value?


Edited to add additional information:
There is definitely something wrong with the data that Vanguard is using for "Performance" information. I saw that they had a "filter option". While all my current accounts and assets were checked by default, so one would assume that the total value as of 5/26/2023 should agree with the "Performance" info ending balance as of 5/26/2023, I'm suspecting that Vanguard is either counting old data for accounts that were closed years ago or is double counting the accounts that were zeroed out last year with a transition to a brokerage account.

Sometime ago I posted that old account information was appearing on various forms that Vanguard was producing on line for account use. These contained old employer data, phone numbers, etc. They were not shown in the on line Profile. So, there was no way for me to delete them or change them. I had to call Vanguard to clean up this old data, but I thought it was just some old phone numbers. Now I'm wondering what other old account values Vanguard has stored somewhere that I can't access to check.

In any case, it appears that the "Performance" information that appears on the "Dashboard" is not usable. Has anyone else noticed problems lately with "Performance" information on the Vanguard website?
The only “issue” I’ve ever noticed is if I owned a mutual at some point and sold out, and reinvested later, they calculate current return to include the previous closed out investment. I don’t know if that is standard practice or not, but it’s pretty easy to figure out what they’re doing. You can also exclude that data by filtering out the old time period.
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btq96r
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Re: Finra fines Vanguard $800,000 for misleading information on money market accounts

Post by btq96r »

This seems to be kind of a Rorschach Test for some folks. While I would need someone else to point out any bias I bring, I see this as a warning to Vanguard more than anything. They need to make sure things aren't running too fast and too loose which I suspect might be the case. I would hope the management team takes the opportunity this brings to tighten up their shot group. The rates and market turmoil on top of all the other considerations like staffing levels and IT shortfalls aren't excuses, but operating conditions they have to deal with and overcome like everyone else.

As to the "who pays for it"....of course the Vanguard customers/owners are likely to take this one on the chin in whatever proportion it's spread out as. Unless this is going to be something that triggers a docking of bonuses on anyone who had a supervisory role, but I wouldn't bet on that.
water2357
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Re: Finra fines Vanguard $800,000 for misleading information on money market accounts

Post by water2357 »

I checked the Vanguard "Performance" reporting mechanism month by month data on the Dashboard webpage from 5/26/23 through 5/30/23 and every entry was incorrect for all 10 years shown. If this "Performance" reporting mechanism was not able to report any accurate data for at least 5 days time, it should have been disabled, until they could fix it. I don't think something not working properly for at least 5 days is a timing issue. Maybe some days it works, maybe not, but I wouldn't trust it, since on multiple logins over 5 days every piece of data shown was incorrect.

I'm not referring to anything except the "Performance" data. If the "Performance" data ending balance is correct, then Vanguard owes me a 40% increase in what they are reporting under "Holdings" as my ending account balance. Something tells me that I won't be getting that.
cseinv
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Some bad news on Vanguard Group

Post by cseinv »

[This thread has been merged with this on-going discussion. Moderator Pops1860}

Just some bad news on Vanguard.

There goes your expense ratio.

https://www.financialadvisoriq.com/c/40 ... t_mistakes

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TheTimeLord
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Re: Some bad news on Vanguard Group

Post by TheTimeLord »

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stan1
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Re: Some bad news on Vanguard Group

Post by stan1 »

cseinv wrote: Wed May 31, 2023 11:42 am Just some bad news on Vanguard.

There goes your expense ratio.
It is probably cheaper to pay the fine than to fix the problems.
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Re: Some bad news on Vanguard Group

Post by hnd »

VG takes in like 6 billion in revenue a year.
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Wiggums
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Re: Some bad news on Vanguard Group

Post by Wiggums »

Only an 800k fine and 8.5 million statements. The liability to Vanguard doesn’t even move the needle.
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iamright
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Latest Vanguard customer fiasco

Post by iamright »

[Topic merged into this existing discussion - mod mkc]


Here's an article from today's WSJ that identifies a fine that FINRA just laid on Vanguard for 'erroneously' claiming returns on their Money Market Funds for three years that were overstated by a factor of 30.
------------------------------------------------------------------------------------------------------------------------------------------------
Vanguard Fined for Misleading Money-Market Fund Customers
Finra says asset manager sent statements with incorrect information about yields, income
By Justin Baer
June 1, 2023 9:55 am ET
________________________________________
Vanguard Group was fined and censured by the Financial Industry Regulatory Authority for errors that appeared in more than eight million account statements. Finra, Wall Street’s self-regulator, said Vanguard had overstated projected yield and projected annual income for nine money-market funds. In a filing, signed last month by representatives of both Finra and Vanguard, it ordered the investing giant to pay $800,000.
Finra said a technical glitch caused the errors: Newer information from an automated data feed stopped overwriting certain existing data. For nearly a year, Vanguard sent out statements with inaccurate figures. For instance, September 2020 statements displayed an estimated yield of 1.87% for one money-market fund. A month later, after Vanguard corrected the error, statements showed the same fund with an estimated yield of 0.06%.
Vanguard was slow to fix the problem, Finra said, even after some 50 customers pointed out the errors. The filing said Vanguard “accepts and consents” to Finra’s findings without admitting or denying them. Vanguard has fixed the problems, which didn’t affect customers’ actual returns.

“Vanguard Marketing takes its regulatory obligations seriously, and the firm is pleased to have resolved this matter,” :happy :happy a Vanguard spokeswoman said in a statement. “Vanguard continues to make significant investments to improve our client and digital experience.”
After Finra began to investigate the problems with estimated yield and income, Vanguard self-reported three other errors that had affected customers’ statements around the same time, the regulator said. In one instance, some statements incorrectly identified deposits as increases in market value. In another, Vanguard misstated customers’ margin accounts. A third problem related to the way the company reported the effects of stock splits and other corporate actions on customer returns.

The misleading statements were sent in 2019, 2020 and 2021
, Finra said.

The missteps may reflect Vanguard’s struggle to keep pace with the torrid growth of its investing platforms, which have flourished in the past decade as investors flocked to the low-cost index funds the company once pioneered, said Jeff DeMaso, editor of The Independent Vanguard Adviser, an investing newsletter. “Vanguard’s tech systems have definitely lagged behind its peers,” DeMaso said. “Their whole value proposition is to keep costs really low, but to do that you have to cut back somewhere. The service side is where Vanguard historically cuts things to the bone to keep costs down.”
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Wiggums
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Re: Latest Vanguard customer fiasco

Post by Wiggums »

Follow this thread

viewtopic.php?t=405404
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Re: Finra fines Vanguard $800,000 for misleading information on money market accounts

Post by mkc »

iamright's topic has been merged into this existing one. Thank you to the member who reported it and explained what was wrong - mod mkc
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rob
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Re: Some bad news on Vanguard Group

Post by rob »

stan1 wrote: Wed May 31, 2023 11:47 am It is probably cheaper to pay the fine than to fix the problems.
Wiggums wrote: Wed May 31, 2023 11:55 am Only an 800k fine and 8.5 million statements. The liability to Vanguard doesn’t even move the needle.
This is the truth... While FINRA is toothless it's a cost of doing business that easily drops to the bottom of the priority list and all the firms know it, so just play the game. 99.99...% of the public does not care.
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dagsboro
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Vanguard Fined By FINRA For Misleading Projections For 9 Money Market Funds??

Post by dagsboro »

[Merged into existing discussion - moderator oldcomputerguy]

Vanguard was just fined $800,000 for misleading projections about 9 Money Market Funds. Which funds were these and when did the problem, which appears to be technical in nature, take place?
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