Vanguard transactions on 1/27/21

[Gumby]

If you bought or sold a Vanguard mutual fund during the day yesterday (1/27/21), you should double-check the price at which the trade was executed. I submitted a buy order to Vanguard for VWENX at about 2pm eastern yesterday. In the normal course of events (and I think by law), if you submit an order during the trading day, it executes at the closing price for that day, which in this case was $76.05. Instead, they executed the trade at $77.51, which was the closing price for the day prior (1/26/21), which means I got fewer shares.

I called them and the rep did not seem to understand that their mutual funds have a single price each day and that when you submit an order it gets traded at the NAV set at the closing of that day, not the day before. She did tell me that Vanguard had a computer outage yesterday evening, so maybe that is the cause of the problem. She took down all the info and promised a call back in 24 to 48 hours.

I'll update when I hear more.

 

[MichaelB]

Thanks for the heads up. For sure you’ll get it sorted out with Vanguard but it has to be a PITA, especially the part about the rep not knowing the basic on fund pricing.

 

[REWahoo]

Although I did not trade any Vanguard shares yesterday I did notice a delay of about four hours in reporting end-of-day share prices on the Vanguard website. The computer outage you were told about would account for the delay.

I doubt you were the only one this happened to. Hope you can get the discrepancy resolved without a hassle.

 

[MRG]

Thanks the outage explains the message on Fidelity about Vanguard fund prices were backdated. Your understanding of pricing is the same as mine.

I'm glad I'm retired.

 

[RetiredAt55.5]

If you bought or sold a Vanguard mutual fund during the day yesterday (1/27/21), you should double-check the price at which the trade was executed. I submitted a buy order to Vanguard for VWENX at about 2pm eastern yesterday. In the normal course of events (and I think by law), if you submit an order during the trading day, it executes at the closing price for that day, which in this case was $76.05. Instead, they executed the trade at $77.51, which was the closing price for the day prior (1/26/21), which means I got fewer shares.

I called them and the rep did not seem to understand that their mutual funds have a single price each day and that when you submit an order it gets traded at the NAV set at the closing of that day, not the day before. She did tell me that Vanguard had a computer outage yesterday evening, so maybe that is the cause of the problem. She took down all the info and promised a call back in 24 to 48 hours.

I'll update when I hear more.

Probably a newbie rep.

Mutual fund transactions are always executed at the next market close of business price. ETF transactions are priced somewhat in real-time as the trade is executed.

 

[walkinwood]

I just checked my 1/27 transaction - no error.

 

[foxfirev5]

Got the message from Fido and it would appear to me that they were gloating a bit. I also note that they are a bit obtuse in describing my VG ETF's held in their accounts. My total stock market fund at VG, largest in the world, is simply referred to as VG Index Fund.

 

[Al in Ohio]

If you bought or sold a Vanguard mutual fund during the day yesterday (1/27/21), you should double-check the price at which the trade was executed. I submitted a buy order to Vanguard for VWENX at about 2pm eastern yesterday. In the normal course of events (and I think by law), if you submit an order during the trading day, it executes at the closing price for that day, which in this case was $76.05. Instead, they executed the trade at $77.51, which was the closing price for the day prior (1/26/21), which means I got fewer shares.



I called them and the rep did not seem to understand that their mutual funds have a single price each day and that when you submit an order it gets traded at the NAV set at the closing of that day, not the day before. She did tell me that Vanguard had a computer outage yesterday evening, so maybe that is the cause of the problem. She took down all the info and promised a call back in 24 to 48 hours.



I'll update when I hear more.

I didn’t do any trading on the site yesterday, but in the late afternoon I was trying to check on some of my accounts and to see if a bank EFT occurred and the site kept freezing up on me. I had to log out twice and re log in. I gave up.

 

[aaronc879]

OP, don't mean to hijack your thread so if you want me to start a new one I will. I am trying to transfer an IRA from one brokerage over to Vanguard. I got the medallion guarantee signature and mailed out the paperwork on 1/13. The Vanguard website says they are still waiting for my paperwork. I did send it snail-mail to the PO Box rather than overnight to the actual office building but it's been over two weeks. They should have gotten by now, right? How long do I wait before I contact them? Contacting them by phone is not very easy. I hope it's easier to get money out than put money in when the time comes.

 

[jollystomper]

I did make a mutual fund trade yesterday at Vanguard. My actions were delayed as I could not get to the website between about 9AM and noon. downdetector.com indicated manywere having issues getting in during that time. I did execute the trade in the afternoon and did get the correct closing price for that day. Yahoo, from which I programmatically capture the daily prices to update Quicken every evening still had the Tuesday closing price.

 

[Gumby]

My trade was in the young wife's self-directed 403b account, so that adds a layer of complexity. I can't believe that we are the only ones affected by this error.

And, just FYI, Rule 22c-1 of the Investment Company Act of 1940 has been described by the SEC as follows:

Rule 22c-1 under the Investment Company Act, the "forward pricing" rule, requires funds, their principal underwriters, and dealers to sell and redeem fund shares at a price based on the current net asset value ("NAV") next computed after receipt of an order to buy or redeem.2 The rule also requires that funds calculate their NAV at least once a day.3 Today, most funds calculate NAV when the major U.S. stock exchanges close at 4:00 p.m. Eastern Time.4

Under rule 22c-1, an investor who submits an order before the 4:00 p.m. pricing time must receive that day's price, and an investor who submits an order after the pricing time must receive the next day's price. "Late trading" refers to the illegal practice of permitting a purchase or redemption order received after the 4:00 p.m. pricing time to receive the share price calculated as of 4:00 p.m. that day.5 A late trader can exploit events occurring after 4:00 p.m., such as earnings announcements, by buying on good news (and thus obtaining fund shares too cheaply) or selling on bad news (and thus selling at a higher price than the shares are worth). In either case, the late trader profits at the expense of long-term investors in the fund.

Source: https://www.sec.gov/rules/proposed/ic-26288.htm#:~:text=Rule 22c-1 under the,order to buy or redeem.

See 17 CFR Sec 270.22c-1


Which is why my next call will be to the SEC if Vanguard doesn't fix my issue.

 

[RetiredAt55.5]

Which is why my next call will be to the SEC if Vanguard doesn't fix my issue.

I'm certain Vanguard will correct this for you. Rather then wait on the phone, it'd be more time efficient to send them a secure email with the trade date and time. Just the facts, you can vent later after they fix it

BTW, once I submit a tranaction, I like to print out the confirmation page (as a pdf), as the confirmation page lists the submission time.

You might have to wait a couple of days for them to fix this, as it likely involves IT creating special jobs to correct the transactions (as you point out, this likely effected others, and IT might already be working on it).

Engaging the SEC isn't going to get this fixed any quicker.

 

[Gumby]

Mistakes happen; I don't particularly fault them for that. But if they give me any pushback about fixing it, I will be ornery.

 

[RobbieB]

I'd be more worried about the clueless rep than the computer error.

 

[Gumby]

Exactly. I'd be much more confident if she said "Your're right. Let me contact someone who can fix it."

 

[Shredder]

I'd be more worried about the clueless rep than the computer error.

I spent two afternoons online and on the phone trying to re-establish a direct deposit account at vanguard. The reps gave me inaccurate advice both times, the calls took forever, and as of today it's still not straightened out.

I'll just re route the direct deposit to a local bank Monday, and then start looking at fido to start moving my accounts. Sux because ive been at vanguard since the 70's.

 

[nwsteve]

I'll just re route the direct deposit to a local bank Monday, and then start looking at fido to start moving my accounts. Sux because ive be at vanguard since the 70's.

When it is time to go, no sense in hanging around! It almost appears if you don't want their advisory you are a nuisance.

 

[MRG]

I'm certain Vanguard will correct this for you. Rather then wait on the phone, it'd be more time efficient to send them a secure email with the trade date and time. Just the facts, you can vent later after they fix it

BTW, once I submit a tranaction, I like to print out the confirmation page (as a pdf), as the confirmation page lists the submission time.

You might have to wait a couple of days for them to fix this, as it likely involves IT creating special jobs to correct the transactions (as you point out, this likely effected others, and IT might already be working on it).

Engaging the SEC isn't going to get this fixed any quicker.

+1000

I've seen first hand what you are saying. Vanguard treats mail as a channel and it will be sent to the proper area. Only a select few can make a change like that. It may involve someone with technical skills. Financial organizations are not cool with a programmer type just "fixing" the data with SQL, it kinda bypasses audit requirements.

 

[gauss]

If you have a mutual fund purchase/redemption confirmation that shows something other than the published NAV for that day, then I think that you paperwork should be able to do the talking for you.

Are you sure that the published NAV that you are looking at is correct?

I think I saw on VG's site recently that NAV's published at ~ 6pm are subject to revision.

Regarding the rep -- Is this problem occurring in a VBS brokerage account or a traditional/legacy mutual fund only account? If the former, is it possible that the Rep is mainly use to dealing with brokerage transactions, which of course are priced and traded throughout the day?

I still have not converted any of my VG mutual fund only accounts.

-gauss

 

[Gumby]

I am 100% certain that I have the correct price. I have the page print directly from the Vanguard site this morning as to the precise NAV for the day of the trade, the day prior and the day after. They traded me at the NAV for the day before, probably because they had a computer outage the afternoon/evening of my trade. They screwed up, violated the SEC forward pricing rule, and they need to fix it.

It's not a huge amount of money at issue (~$1200 on a $60,000 investment), but it annoys me that I should have to take the trouble to straighten this out. I am not a particularly confrontational person and I let a lot of things slide, but if I care enough to call and complain, you can be certain I have done the necessary research and that I am correct.

ETFs may be priced through the day, but straight mutual funds are priced at the NAV determined as of the close that day. This is not a brokerage account and this was not an ETF. Part of the problem is that it is a 403b account and the reps for that may not be accustomed to these sorts of issues.

 

[gauss]

^ Thank you for precisely describing the situation.

If it were me, I would probably submit my question to them in writing including a copy of the buy 'confirmation' that clearly shows the (incorrect) price and the date. Maybe then follow up with a phone call in 10 days to check the status of your inquiry -- hopefully they will have access to a scanned copy of your letter.

I have had problems with Vanguard in the past (including botching the accounting of $50,000 rollovers) that could have gotten me in hot water with the IRS. It was always a pain to deal with them, but in the end I was always able to get my point across and eventually corrected because I always had the paperwork that demonstrated the error and that my point was correct.

I suspect that several follow up phone calls will be necessary because you will have to convince the front-line agent that this is indeed a real problem, and they will likely need to forward your case to a second level agent. 2nd level agent will likely then need to write up a request to the back-office for the accountants to make the change. Just thank them for the help that they are providing you and that you really appreciate it. You really want to get them on your side so that they will argue your case effectively internally.

For me, this type of approach has worked in the past. Other options would include writing off the $1,200 and moving on with your life if you think that this will cause you more than $1,200 in aggravation.

Another option would be to pursue it through their legal department, but I suspect that they may not take you seriously if you are not an attorney or have not availed yourself of the official support channels first.

I am hoping that we see less of these types of issues across the economy as Covid eventually fades.

Good luck in your quest!

-gauss

 

[sengsational]

If it were me, I might not even call. I'd write a letter with the screen shots, with delivery tracking, just to get formally "on the record" with the problem. Then I'd wait a few weeks, log on, and see if they fixed it, which they almost certainly will have done.

What probably happened is that batch job "A" that updates prices failed, and then batch job "B" ran with yesterday's prices. They probably already knew this happened, despite the clueless rep. If they didn't know it, they'll know it when you and the rest of those affected start calling and writing.

I predict you'll get an email that tells you, and the rest affected, of the problem and when to expect the correction to post.

Something similar happened to me a few days ago. Not involving a transaction, though. One of the companies that hold my investments had some nutty price on one of my holdings. If true, it would have increased my net worth by 60% or 80% or something. I just logged off, ignoring the whole thing. The following day, everything was back to normal.

 

[Gumby]

I just wanted to report back that Vanguard has fixed the problem. They never did communicate back to us, but a review of the account online shows that the trade has been re-run with the correct closing price.

 

[W2R]

I just wanted to report back that Vanguard has fixed the problem. They never did communicate back to us, but a review of the account online shows that the trade has been re-run with the correct closing price.

Terrific! So glad this situation was resolved.

 

[ownyourfuture]

Color me shocked.
Brokerage firms eliminate a major part of revenues (commissions) & service/support begins to suffer.