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

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

Post by exodusing »

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

Post by ResearchMed »

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"...

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

Post by EZ James »

One occurred when customer contributions to an account were identified as an increase in market value instead of a cash deposit.
Maybe a Beardstown Lady in accounting Dept?
gotoparks
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Re: Finra fines Vanguard $800,000 for misleading information on money market accounts

Post by gotoparks »

They probably need to upgrade their computers, etc. Maybe they should charge a little more to get the job done.
mighty72
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Re: Finra fines Vanguard $800,000 for misleading information on money market accounts

Post by mighty72 »

Aren't the "customers" owners? Vanguard doesn't respond to owners promptly. I wonder how they treat non-owners.

Investing in technology is a no brainier and I hope Vanguard does it.
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Cheez-It Guy
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Re: Finra fines Vanguard $800,000 for misleading information on money market accounts

Post by Cheez-It Guy »

Still the best money market funds.

Or ARE they?!
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Taylor Larimore
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Re: Finra fines Vanguard $800,000 for misleading information on money market accounts

Post by Taylor Larimore »

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
Bogleheads:

Jack Bogle would be appalled.

Best wishes.
Taylor
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Fpdesignco
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Re: Finra fines Vanguard $800,000 for misleading information on money market accounts

Post by Fpdesignco »

Taylor Larimore wrote: Sat May 27, 2023 6:05 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
Bogleheads:

Jack Bogle would be appalled.

Best wishes.
Taylor
Jack Bogle's order to his employees: “Do what’s right and if you’re not sure, ask your boss.”
8.5 million statements and only a 800k fine… good job FINRA.
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Cheez-It Guy
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Re: Finra fines Vanguard $800,000 for misleading information on money market accounts

Post by Cheez-It Guy »

What if you don't know that your boss doesn't know that he doesn't know what's right?
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ResearchMed
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Re: Finra fines Vanguard $800,000 for misleading information on money market accounts

Post by ResearchMed »

Cheez-It Guy wrote: Sat May 27, 2023 6:13 pm What if you don't know that your boss doesn't know that he doesn't know what's right?

What if you *do* know that your boss doesn't know that he doesn't know what's right?

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

Post by JackoC »

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. An actually significant fine or liability judgement against Vanguard would of course be paid by Vanguard fund holder. By same token large fines or liability judgements against public stock corporations are paid by some combination of shareholders and employees but usually mainly by shareholders, as counted in $'s at least, if really serious (company value decline from reg/liability payout or just bad business decision is shareholder loss, whereas you can't make employees pay in the long run by cutting their pay below market because they'll leave, having to get another job has a potentially serious non-monetary cost though). So a BH 'investing in the whole market' is probably mainly paying for any corporate (as in public stock company) foible you read about in the media. You could avoid paying for (non public stock) Vanguard foibles by not using them...once again though amount is trivial and matter of opinion/speculation if public stock co competitors are less likely to get fined. I use Vang FWIW, I've always thought of in terms of 'you get what you pay for' to some degree at least, and while competitors have elminated the cost gap on some things, not all things (MM and bond funds as cheap as Vang's are still unusual).
Last edited by JackoC on Sat May 27, 2023 6:27 pm, edited 1 time in total.
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Cheez-It Guy
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Re: Finra fines Vanguard $800,000 for misleading information on money market accounts

Post by Cheez-It Guy »

ResearchMed wrote: Sat May 27, 2023 6:16 pm
Cheez-It Guy wrote: Sat May 27, 2023 6:13 pm What if you don't know that your boss doesn't know that he doesn't know what's right?

What if you *do* know that your boss doesn't know that he doesn't know what's right?

RM
Go over their head, I suppose.
AnotherRetiredGuy
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Re: Finra fines Vanguard $800,000 for misleading information on money market accounts

Post by AnotherRetiredGuy »

gotoparks wrote: Sat May 27, 2023 3:53 pm They probably need to upgrade their computers, etc. Maybe they should charge a little more to get the job done.
Throwing more money/resources at what look to me to be software development testing issues is not usually helpful. To some extent, the more layers of staff, the more bugs — I say as a retired financial services programmer. Sometimes the answer is adding one more item to a checklist — unless the existing checklist was skipped, which then is the problem. A meeting needed? Almost surely.

As for who pays for the fine, of course, we all do. As a Vanguard customer, a big fine is NOT in my interest. A small one, to get a bit of attention — probably.

As for Vanguard being owned by customers, I don’t think the corporate structure is relevant. If something similar happened at a mutual insurance company, a small fine would still be worth it for getting attention, even though (I hope I’m right here) mutual insurance companies are more clearly owned by customers than is Vanguard.
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asset_chaos
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Re: Finra fines Vanguard $800,000 for misleading information on money market accounts

Post by asset_chaos »

While failure to do things correctly is still failure and worthy of censure, let's not go too far overboard with the Vanguard bashing. The article quotes the FINRA order as saying, "The errors didn’t affect the market yield paid to customers nor the holdings information displayed on their statements". I read that as saying that no Vanguard account holder lost money; they had an incorrect percent return reported. Not good, but not losing anyone's money nor charging fees for nothing nor engaging in a host of ripoffs documented at other financial institutions.

My reading of the article suggests the fine was mainly because 100 account holders contacted Vanguard pointing out the wrong numbers on their statement, and Vanguard didn't do anything about it for six months. Again, not good, but relatively small potatoes and deserving of a proportionate amount of shame.
Regards, | | Guy
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asset_chaos
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Re: Finra fines Vanguard $800,000 for misleading information on money market accounts

Post by asset_chaos »

As for the fine, the money to pay it probably comes from the same place that Vanguard used to subsidize the money market funds by $100 million during nearly the same time as they were making this error in money market statement reporting.
Regards, | | Guy
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typical.investor
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Re: Finra fines Vanguard $800,000 for misleading information on money market accounts

Post by typical.investor »

asset_chaos wrote: Sat May 27, 2023 7:41 pm While failure to do things correctly is still failure and worthy of censure, let's not go too far overboard with the Vanguard bashing. The article quotes the FINRA order as saying, "The errors didn’t affect the market yield paid to customers nor the holdings information displayed on their statements". I read that as saying that no Vanguard account holder lost money; they had an incorrect percent return reported. Not good, but not losing anyone's money nor charging fees for nothing nor engaging in a host of ripoffs documented at other financial institutions.

My reading of the article suggests the fine was mainly because 100 account holders contacted Vanguard pointing out the wrong numbers on their statement, and Vanguard didn't do anything about it for six months. Again, not good, but relatively small potatoes and deserving of a proportionate amount of shame.
Sure, but do you look at returns? I do because I have some tilts and monitor them.

This error would affect returns.
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.
And this one too:
The firm also inaccurately report “corporate actions,” such as stock splits, which affected the investment return reporting for an unknown number of accounts.
Worrisome.
stan1
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Re: Finra fines Vanguard $800,000 for misleading information on money market accounts

Post by stan1 »

Cost cutting gone too far.
AnotherRetiredGuy
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Re: Finra fines Vanguard $800,000 for misleading information on money market accounts

Post by AnotherRetiredGuy »

asset_chaos wrote: Sat May 27, 2023 7:41 pm While failure to do things correctly is still failure and worthy of censure, let's not go too far overboard with the bashing.
Agreed.

Yesterday there was a TIAA bug that seems to have affected a larger number of customers:

viewtopic.php?t=405316

Yes, I know — didn’t take six months to fix. My main point is — there are a lot of software bugs out there.

It may soon be possible to do some fancy AI-based study, based on everything in www.Bogleheads.org, to see how the big brokerages we use compare on software bugs. Will Schwab and Fidelity come out on top of Vanguard? Who knows?

I’m in an environment here where I could lose 20 percent of my life savings pretty quickly, and that doesn’t bother me. So if Vanguard terns out to be the buggiest — and they may not be — I’ll probably not care about that either.
talzara
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Re: Finra fines Vanguard $800,000 for misleading information on money market accounts

Post by talzara »

ResearchMed wrote: Sat May 27, 2023 3:35 pm 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"...
Vanguard Marketing Corporation is paying the fine, so it's the brokerage.

The Vanguard Group, Inc. owns VMC, and the mutual funds own VGI, so it is still indirectly being paid by the mutual fund shareholders.
asset_chaos wrote: Sat May 27, 2023 7:50 pm As for the fine, the money to pay it probably comes from the same place that Vanguard used to subsidize the money market funds by $100 million during nearly the same time as they were making this error in money market statement reporting.
That came from VGI, not VMC. It's not a significant difference because VGI owns VMC, but the check to the US government is coming from a different account.
talzara
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Re: Finra fines Vanguard $800,000 for misleading information on money market accounts

Post by talzara »

gotoparks wrote: Sat May 27, 2023 3:53 pm They probably need to upgrade their computers, etc. Maybe they should charge a little more to get the job done.
mighty72 wrote: Sat May 27, 2023 4:05 pm Investing in technology is a no brainier and I hope Vanguard does it.
The bug affected only the brokerage accounts, which are running on the latest platform. It did not affect the legacy mutual fund platform.
AnotherRetiredGuy wrote: Sat May 27, 2023 7:15 pm Throwing more money/resources at what look to me to be software development testing issues is not usually helpful. To some extent, the more layers of staff, the more bugs — I say as a retired financial services programmer. Sometimes the answer is adding one more item to a checklist — unless the existing checklist was skipped, which then is the problem. A meeting needed? Almost surely.
Not just layers of staff, but also layers of complexity.

This bug was caused by failing to update data from a feed.
MishkaWorries
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Re: Finra fines Vanguard $800,000 for misleading information on money market accounts

Post by MishkaWorries »

exodusing wrote: Sat May 27, 2023 3:29 pm [Vanguard] also failed to act promptly when customers noticed something was wrong.
Yah, that checks.
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marcopolo
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Re: Finra fines Vanguard $800,000 for misleading information on money market accounts

Post by marcopolo »

asset_chaos wrote: Sat May 27, 2023 7:50 pm As for the fine, the money to pay it probably comes from the same place that Vanguard used to subsidize the money market funds by $100 million during nearly the same time as they were making this error in money market statement reporting.
What?!?
Vanguard has "loss leaders"?

I am now waiting for all the hand wringing from people that were appalled that Fidelity might be doing this with their zero funds. /s
Once in a while you get shown the light, in the strangest of places if you look at it right.
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beyou
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Re: Finra fines Vanguard $800,000 for misleading information on money market accounts

Post by beyou »

Cheez-It Guy wrote: Sat May 27, 2023 5:16 pm Still the best money market funds.

Or ARE they?!
Yes still the best.


What bothers me is the fact they do not correct mistakes promptly.
Everyone makes mistakes.
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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. »

in addition to the fine, they got censured by Finra (probably because the fine exceeded $5000):
Vanguard agreed to a censure and an $800,000. The firm did not admit or deny Finra’s findings. A company spokesperson did not immediately respond to a request for comment.
From Finra:
The NASD has determined to revise this practice in recognition of the fact that censures should be imposed when disciplining members for violations that particularly warrant the Association’s official disapproval of a respondent’s conduct.

Source
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
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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. »

AnotherRetiredGuy wrote: Sat May 27, 2023 7:15 pm
gotoparks wrote: Sat May 27, 2023 3:53 pm They probably need to upgrade their computers, etc. Maybe they should charge a little more to get the job done.
Throwing more money/resources at what look to me to be software development testing issues is not usually helpful. To some extent, the more layers of staff, the more bugs — I say as a retired financial services programmer. Sometimes the answer is adding one more item to a checklist — unless the existing checklist was skipped, which then is the problem. A meeting needed? Almost surely.

As for who pays for the fine, of course, we all do. As a Vanguard customer, a big fine is NOT in my interest. A small one, to get a bit of attention — probably.

As for Vanguard being owned by customers, I don’t think the corporate structure is relevant. If something similar happened at a mutual insurance company, a small fine would still be worth it for getting attention, even though (I hope I’m right here) mutual insurance companies are more clearly owned by customers than is Vanguard.
this was an interesting take from some giants in the field, including Bogle at the Princeton Mini-Conference. Start at 1 hour 1 minute mark (part 2) to listen to their discussion about mutualization especially Malkiel's take when he was associated with a mutual insurance company.
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
Clarky
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Re: Finra fines Vanguard $800,000 for misleading information on money market accounts

Post by Clarky »

marcopolo wrote: Sun May 28, 2023 3:34 pm
asset_chaos wrote: Sat May 27, 2023 7:50 pm As for the fine, the money to pay it probably comes from the same place that Vanguard used to subsidize the money market funds by $100 million during nearly the same time as they were making this error in money market statement reporting.
What?!?
Vanguard has "loss leaders"?

I am now waiting for all the hand wringing from people that were appalled that Fidelity might be doing this with their zero funds. /s
Probably to keep MM rate positive.
Fallible
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Re: Finra fines Vanguard $800,000 for misleading information on money market accounts

Post by Fallible »

gotoparks wrote: Sat May 27, 2023 3:53 pm They probably need to upgrade their computers, etc. Maybe they should charge a little more to get the job done.
Maybe they should listen to their customer complaints and do something about them. Per FINRA:
From October 2019 to March 2021, the firm received communications from 100 customers who pointed out miscalculations and other errors on their statements. It failed to investigate promptly, Finra said, but did correct the statements after finally looking into the problems.
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Re: Finra fines Vanguard $800,000 for misleading information on money market accounts

Post by asset_chaos »

marcopolo wrote: Sun May 28, 2023 3:34 pm
asset_chaos wrote: Sat May 27, 2023 7:50 pm As for the fine, the money to pay it probably comes from the same place that Vanguard used to subsidize the money market funds by $100 million during nearly the same time as they were making this error in money market statement reporting.
What?!?
Vanguard has "loss leaders"?

I am now waiting for all the hand wringing from people that were appalled that Fidelity might be doing this with their zero funds. /s
I'm doubtful that loss leader is exactly the right term here. The subsidies were when rates were near zero and made presumably to keep the money markets' yields from going below zero. The most important thing to note about the money market expense subsidies is that, as of the last annual report I looked at, they've stopped.
Regards, | | Guy
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asset_chaos
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Re: Finra fines Vanguard $800,000 for misleading information on money market accounts

Post by asset_chaos »

typical.investor wrote: Sat May 27, 2023 7:55 pm
asset_chaos wrote: Sat May 27, 2023 7:41 pm While failure to do things correctly is still failure and worthy of censure, let's not go too far overboard with the Vanguard bashing. The article quotes the FINRA order as saying, "The errors didn’t affect the market yield paid to customers nor the holdings information displayed on their statements". I read that as saying that no Vanguard account holder lost money; they had an incorrect percent return reported. Not good, but not losing anyone's money nor charging fees for nothing nor engaging in a host of ripoffs documented at other financial institutions.

My reading of the article suggests the fine was mainly because 100 account holders contacted Vanguard pointing out the wrong numbers on their statement, and Vanguard didn't do anything about it for six months. Again, not good, but relatively small potatoes and deserving of a proportionate amount of shame.
Sure, but do you look at returns? I do because I have some tilts and monitor them.
For money markets I don't really look at returns. As I don't count cash as a portfolio holding, it doesn't effect my investment portfolio asset allocation. I keep just enough cash on hand in a money market for anticipated near term spending and to maintain comfort levels and just assume my cash is getting whatever is the going rate at any time.

Yes, Vanguard's mistake at misattributing items to incorrectly calculate money markets' rates of return on statements and then ignoring the mistake for six months after it was pointed out to them are actions wothy of censure. But, as no one lost money, I think it's a small-ish error and worthy of mild censure.

However, should it become the harbinger of bigger, more consequential mistakes, I reserve the right to change my mind.-)
Regards, | | Guy
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Re: Finra fines Vanguard $800,000 for misleading information on money market accounts

Post by rkhusky »

100 complaints from 8.5 million reports. Doesn’t look like many people are scrutinizing their reports. I don’t because I keep track of my holdings more frequently via my own spreadsheets. And I don’t care about Vanguard’s rate of return, just number of shares and share price.
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Re: Finra fines Vanguard $800,000 for misleading information on money market accounts

Post by billaster »

rkhusky wrote: Sun May 28, 2023 8:27 pm 100 complaints from 8.5 million reports. Doesn’t look like many people are scrutinizing their reports.
Sounds about right. What percentage of investors do you think

1) know how to compute an internal rate of return given cash flows in and out of a fund
2) and would take the trouble to double check their statement return calculation.
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Re: Finra fines Vanguard $800,000 for misleading information on money market accounts

Post by NYCwriter »

billaster wrote: Sun May 28, 2023 8:49 pm
rkhusky wrote: Sun May 28, 2023 8:27 pm 100 complaints from 8.5 million reports. Doesn’t look like many people are scrutinizing their reports.
Sounds about right. What percentage of investors do you think

1) know how to compute an internal rate of return given cash flows in and out of a fund
2) and would take the trouble to double check their statement return calculation.
Bogleheads :D
And accounting professionals.
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Re: Finra fines Vanguard $800,000 for misleading information on money market accounts

Post by Metsfan91 »

ResearchMed wrote: Sat May 27, 2023 6:16 pm
Cheez-It Guy wrote: Sat May 27, 2023 6:13 pm What if you don't know that your boss doesn't know that he doesn't know what's right?

What if you *do* know that your boss doesn't know that he doesn't know what's right?

RM
You also know that your boss is dismissive. You keep it to yourself.
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water2357
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Re: Finra fines Vanguard $800,000 for misleading information on money market accounts

Post by water2357 »

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

Post by VTSAX_Bro »

Taylor Larimore wrote: Sat May 27, 2023 6:05 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
Bogleheads:

Jack Bogle would be appalled.

Best wishes.
Taylor
Why are people raging about a technical issue? We’ve known that the legacy technology stack has been the cause of issues that affect client statements and it’s taking a long time to modernize the tech stack.

The article is written as a hit piece because that is what sells :dollar. [Unnecessary comment removed by admin LadyGeek]
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Re: Finra fines Vanguard $800,000 for misleading information on money market accounts

Post by sycamore »

water2357 wrote: Mon May 29, 2023 1:00 am ...
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?
I think it's an ongoing problem for some users. Hard to say what's causing it or how widespread it is. The Portfolio Watch is perhaps most notorious but problems are reported on various Vanguard web pages:

viewtopic.php?t=362407
viewtopic.php?t=394172

If you search the forum you'll find similar threads.
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Re: Finra fines Vanguard $800,000 for misleading information on money market accounts

Post by Swansea »

EZ James wrote: Sat May 27, 2023 3:52 pm
One occurred when customer contributions to an account were identified as an increase in market value instead of a cash deposit.
Maybe a Beardstown Lady in accounting Dept?
Got a good chuckle!
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exodusing
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Re: Finra fines Vanguard $800,000 for misleading information on money market accounts

Post by exodusing »

VTSAX_Bro wrote: Mon May 29, 2023 7:11 am
Taylor Larimore wrote: Sat May 27, 2023 6:05 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
Bogleheads:

Jack Bogle would be appalled.

Best wishes.
Taylor
Why are people raging about a technical issue? We’ve known that the legacy technology stack has been the cause of issues that affect client statements and it’s taking a long time to modernize the tech stack.

The article is written as a hit piece because that is what sells :dollar. [Unnecessary comment removed by admin LadyGeek]
People tend to get upset if their financial institution has "issues that affect client statements". Showing account balances and processing transactions are also technical issues.

What in the article is not accurate?
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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. »

NYCwriter wrote: Sun May 28, 2023 11:53 pm
billaster wrote: Sun May 28, 2023 8:49 pm
rkhusky wrote: Sun May 28, 2023 8:27 pm 100 complaints from 8.5 million reports. Doesn’t look like many people are scrutinizing their reports.
Sounds about right. What percentage of investors do you think

1) know how to compute an internal rate of return given cash flows in and out of a fund
2) and would take the trouble to double check their statement return calculation.
Bogleheads :D
And accounting professionals.
Assuming this was caught due to complaints filed but...(and maybe i shouldn't assume this because auditors are people too, i.e., able to make a mistake), could this have eventually been found through normal auditing process?
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
stan1
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Re: Finra fines Vanguard $800,000 for misleading information on money market accounts

Post by stan1 »

arcticpineapplecorp. wrote: Mon May 29, 2023 9:39 am could this have eventually been found through normal auditing process?
My guess is it was not required to be an auditable item.
For example, given all the errors on cost basis, I'm going to assume cost basis tracking is also not required to be an auditable item.

Could be a contributing factor to why we see decontenting on Vanguard's website. If they try to display helpful data that turns out to be wrong they could face consequences and it is better to do a more minimal effort to lower risk of a mistake or liability.

I'll go a step further: While a brokerage is required to report cost basis to the IRS, they are not leqally required to report *accurate* cost basis to the IRS. There is no penalty or consequence for issuing a 1099 with errors and there also does not appear to be a legal requirement to issue a corrected 1099 if there is an error.
Silence Dogood
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Re: Finra fines Vanguard $800,000 for misleading information on money market accounts

Post by Silence Dogood »

Is Vanguard required to notify those who received inaccurate statements?

How can I determine if my statements are inaccurate?
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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. »

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

Post by rkhusky »

exodusing wrote: Mon May 29, 2023 9:09 am
VTSAX_Bro wrote: Mon May 29, 2023 7:11 am
Taylor Larimore wrote: Sat May 27, 2023 6:05 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
Bogleheads:

Jack Bogle would be appalled.

Best wishes.
Taylor
Why are people raging about a technical issue? We’ve known that the legacy technology stack has been the cause of issues that affect client statements and it’s taking a long time to modernize the tech stack.

The article is written as a hit piece because that is what sells :dollar. [Unnecessary comment removed by admin LadyGeek]
People tend to get upset if their financial institution has "issues that affect client statements". Showing account balances and processing transactions are also technical issues.

What in the article is not accurate?
People like to complain. Just look at the number of posts complaining about the white space on Vanguard’s web site.
Topic Author
exodusing
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Re: Finra fines Vanguard $800,000 for misleading information on money market accounts

Post by exodusing »

rkhusky wrote: Mon May 29, 2023 2:26 pm
exodusing wrote: Mon May 29, 2023 9:09 am
VTSAX_Bro wrote: Mon May 29, 2023 7:11 am
Taylor Larimore wrote: Sat May 27, 2023 6:05 pm
Bogleheads:

Jack Bogle would be appalled.

Best wishes.
Taylor
Why are people raging about a technical issue? We’ve known that the legacy technology stack has been the cause of issues that affect client statements and it’s taking a long time to modernize the tech stack.

The article is written as a hit piece because that is what sells :dollar. [Unnecessary comment removed by admin LadyGeek]
People tend to get upset if their financial institution has "issues that affect client statements". Showing account balances and processing transactions are also technical issues.

What in the article is not accurate?
People like to complain. Just look at the number of posts complaining about the white space on Vanguard’s web site.
Some complaints are more serious than others.
talzara
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Re: Finra fines Vanguard $800,000 for misleading information on money market accounts

Post by talzara »

VTSAX_Bro wrote: Mon May 29, 2023 7:11 am Why are people raging about a technical issue? We’ve known that the legacy technology stack has been the cause of issues that affect client statements and it’s taking a long time to modernize the tech stack.
This bug only affected the new brokerage platform.

Vanguard retired its legacy brokerage platform in 2021. The legacy mutual fund platform is still in use, but it wasn't affected by the bug.
water2357
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Re: Finra fines Vanguard $800,000 for misleading information on money market accounts

Post by water2357 »

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

Post by rob »

asset_chaos wrote: Sat May 27, 2023 7:41 pm My reading of the article suggests the fine was mainly because 100 account holders contacted Vanguard pointing out the wrong numbers on their statement, and Vanguard didn't do anything about it for six months. Again, not good, but relatively small potatoes and deserving of a proportionate amount of shame.
This is their standard response when errors are pointed out... Good to see FINRA give them at least a slap on the pinky...
| Rob | Its a dangerous business going out your front door. - J.R.R.Tolkien
Silence Dogood
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Re: Finra fines Vanguard $800,000 for misleading information on money market accounts

Post by Silence Dogood »

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

Post by chinchin »

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.
not financial advice
z3r0c00l
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Re: Finra fines Vanguard $800,000 for misleading information on money market accounts

Post by z3r0c00l »

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!
70% Global Stocks / 30% Bonds
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