Uh Oh, Vanguard screwed up

[brewer12345]

Bloomberg.com: Worldwide

"Executives of Vanguard Group Inc., the second-biggest U.S. manager of stock and bond mutual funds, illegally invested client assets in companies running Internet gambling businesses banned in the U.S., according to a lawsuit.
Chief Investment Officer George Sauter, portfolio manager Duane Kelly and eight trustees violated U.S. racketeering laws and breached their fiduciary duties to investors by acquiring stock in the Web-based businesses, investors in two Vanguard- managed funds said in a complaint filed today in U.S. District Court in New York. "

RICO suit, anyone?

 

[REWahoo]

Anyone own these funds?

"Named in the suit are the Vanguard International Equity Index Funds, which does business as the Vanguard European Stock Index Fund, and the Vanguard Horizon Funds, which the complaint said is also known as the Vanguard Global Equity Fund."

 

[Khan]

Bloomberg.com: Worldwide

"Executives of Vanguard Group Inc., the second-biggest U.S. manager of stock and bond mutual funds, illegally invested client assets in companies running Internet gambling businesses banned in the U.S., according to a lawsuit.
Chief Investment Officer George Sauter, portfolio manager Duane Kelly and eight trustees violated U.S. racketeering laws and breached their fiduciary duties to investors by acquiring stock in the Web-based businesses, investors in two Vanguard- managed funds said in a complaint filed today in U.S. District Court in New York. "

RICO suit, anyone?

This raises the question of why the 'free market' mavens have banned Internet gambling and are now set up to destroy anyone with less than six degrees of separation.

 

[Marquette]

Doh, guess they forgot to screen some out from those computer pickers.

 

[mn54]

I assume these stocks are not listed on a U.S. stock exchange. What exchange are they listed? Was it common knowledge that these stocks are illegal to own? What if an individual investor were to buy these stocks? Or could they?

 

[haha]

This raises the question of why the 'free market' mavens have banned Internet gambling and are now set up to destroy anyone with less than six degrees of separation.

Tax hunger. Stateside gambling is a massive windfall that none of these jurisdictions want to lose.

Ha

 

[clifp]

This raises the question of why the 'free market' mavens have banned Internet gambling and are now set up to destroy anyone with less than six degrees of separation.

Wow, words fail me at times. So our brilliant Congress critters, and there good friends, the lobbyist for Vegas casino pass a silly law making it illegal to gamble or even play poker online. It puts American exporters like Boeing, Microsoft, Intel, Coke and agriculture in the awkward position of having to arguing that other countries should obey WTO rulings on trade, despite that fact the WTO ruled against the US online gambling prohibition.

There are a zillion shady things going on with Wall St. and the government has to pick on a good guy like Vanguard for their computer investing in PartyPoker, amazing. I am going to sleep so much better tonight knowing my government is looking out to protect me from the evils of online gambling. Of course, the sleep will be after my poker night!

 

[cute fuzzy bunny]

Eh, I guess they forgot to [-]pay off[/-] make the right contributions to the right PAC's or finance the right lobbyists. So much for being cheap and low-cost.

Maybe this'll put a little crimp in all the web site "upgrades".

On the downside, maybe it'll be another 4 months before I can use their web site to tell me the astronomically complicated "how much have my investments changed" calculations.

They dont read very well. I sent them a "I'm going to take my money somewhere else if you dont either fix this or tell me whats broke and when you'll fix it" letter and I got back a "thank you for your patience" letter without either a fix or any useful information.

So maybe this company has jumped the shark. Poor customer service, months to make basic fixes, overdoing the web site stuff, flaky funds that buy into illegal companies.

I'm now considering other options.

No, not hiring a financial advisor or buying any of those shoddy American Funds...Put it back in your pants, FinanceDude

 

[Marquette]

I'm now considering other options.

No, not hiring a financial advisor or buying any of those shoddy American Funds...Put it back in your pants, FinanceDude

Ahh, an annuity from Art G, then.

 

[Marquette]

Put it back in your pants, FinanceDude

Also, this should go in the "words to live by" thread.

 

[clifp]

They dont read very well. I sent them a "I'm going to take my money somewhere else if you dont either fix this or tell me whats broke and when you'll fix it" letter and I got back a "thank you for your patience" letter without either a fix or any useful information.

So maybe this company has jumped the shark. Poor customer service, months to make basic fixes, overdoing the web site stuff, flaky funds that buy into illegal companies.

At the risk of incurring attack of the killer bunny.... I just triple check my Vanguard account as well as my Mom's more extensive account. The performance tab is working for me fine, and the research section is a bit more convoluted than the old way but I can find what I need in 4 or 5 clicks, from the my account section.

 

[chinaco]

So much for Socially Responsible Investing.... The important question: Did we make a lot of money?

 

[summer2007]

clifp

I liked your post.

I remember the online gambling ban that they snuck through on the port security bill.

I feel like it's a big loss of freedom to not be able to gamble online...even when you can go to your convince store and gamble on all sorts of lotto's and scratch off tickets or to your church and play bingo!


I think it was Barney Frank that put together a bill to overturn that ban.

I never followed politics much until maybe the last 5 years and I realized that it's pretty crooked!

Jim

 

[brewer12345]

This raises the question of why the 'free market' mavens have banned Internet gambling and are now set up to destroy anyone with less than six degrees of separation.

The racketeering stuff is silly, IMO. Ownership of a publicly traded entity that is involved in a business which the feddle gummint doesn't want competition should not be grounds for getting whacked.

Far more serious, IMO, is the issue of violating fiduciary duties to investors. That, ultimately, is what these guys get paid for and they dropped the ball. For this, some heads should roll.

 

[cute fuzzy bunny]

At the risk of incurring attack of the killer bunny.... I just triple check my Vanguard account as well as my Mom's more extensive account. The performance tab is working for me fine, and the research section is a bit more convoluted than the old way but I can find what I need in 4 or 5 clicks, from the my account section.

I get "this is temporarily not working" when I click the performance tab. I also get the pie charts showing your allocation giving me the wrong data and it changes every few weeks...and this with 100% vanguard funds. They cant do a 'portfolio x-ray' for their own stuff. Oh and my penfed cd's stopped reporting the right numbers until I removed and recreated their external link.

It was an inconvenience for a few weeks. A fair annoyance after a month or two. Pretty much ridiculous when it runs into a four month period.

I think it has to do with the amt of money involved and some of my fund choices. The wacky stuff started happening right around the time when I bought the managed payout funds. So it seems to only be affecting some portion of their customers.

But I cant tell, since they've ignored several requests to tell me what the problem is.

I've got a good nose for smelling rot in a company when it starts. I'm starting to smell some rot.

 

[ats5g]

exactly what laws [civil/criminal] did Vanguard violate here?

 

[utrecht]

Online poker is neither banned or illegal. Put into laymans terms, the law passed last year makes it illegal for any company in the business of accepting wagers to accept money from a US citizen.

If you are an online poker player, you arent in the business of accepting wagers so you cant be charged with anything and no person ever has been. Basically the law criminalizes the money transfer process, not the actual poker playing. The law pretty much did what they wanted though. It scared alot of people into not playing and it made it much tougher to get money on and off of the poker sites so alot of people stopped playing for that reason also.

BTW...Im a semi-professional poker player so i speak from experience.

 

[nwsteve]

But I cant tell, since they've ignored several requests to tell me what the problem is.
I've got a good nose for smelling rot in a company when it starts. I'm starting to smell some rot.

CFB
AMEN!
Vanguard "administers" my former MegaCorp's pension. It took four months and multiple calls to the MegaCorp Pension Mgr to get me a correct answer for my estimated payout for a couple different start date. They claim to have online estimates---only problem is that they are incorrect and partially calculate the full payout. Duh!
It will (or at least should) chap them when payouts start, I am going to auto deposit in my Fidco account.

Just face it, Vanguard best handles "vanilla", any variations not so good. For crying out loud, an email to your Flagship reps takes three flippin days to get a reply and that is when they are at their best.
I am still debating moving it all to Fidco and being done. Let us know if you move and what you find as an option
Nwsteve

 

[dex]

BTW...Im a semi-professional poker player so i speak from experience.

Is there a site you would recommend for ease of play - that you don't have to download their software - I'm wary of that. And no money involved?

 

[utrecht]

Is there a site you would recommend for ease of play - that you don't have to download their software - I'm wary of that. And no money involved?

Theres no need to be wary of downloading the software. Ive downloaded probably 50 different poker sites' software onto my computer with no problems of any kind.

You can play free money games on all of them. Alot of sites closed to U.S. players due to the hassles of the new restrictions. You cant even play free money at the "non-U.S." sites anymore. Of the sites still open, i recommend PokerStars and / or Full Tilt Poker.

I believe the only site where you can play without downloading software is no longer open to Americans.

 

[M Paquette]

Just another 'pay me to go away' civil suit

Bloomberg.com: Worldwide

"Executives of Vanguard Group Inc., the second-biggest U.S. manager of stock and bond mutual funds, illegally invested client assets in companies running Internet gambling businesses banned in the U.S., according to a lawsuit.
Chief Investment Officer George Sauter, portfolio manager Duane Kelly and eight trustees violated U.S. racketeering laws and breached their fiduciary duties to investors by acquiring stock in the Web-based businesses, investors in two Vanguard- managed funds said in a complaint filed today in U.S. District Court in New York. "

RICO suit, anyone?

This one popped up over on the Bogleheads boards as well. It turns out that some gambling businesses in certain foreign countries are public, and appear in certain broad indexes. These businesses are perfectly legal in their countries. One of the businesses is PartyGaming PLC, trading as PRTY. This stock appears in MSCI and FTSE indexes.

Since Vanguard and other index fund operators offer international index funds built around MSCI and FTSE international indexes, it follows that certain foreign businesses might appear in these index funds. That is the point, after all.

Note that Vanguard and other index fund operators are not directly conducting business with these companies. Vanguard funds are not being put down on virtual poker tables or roulette wheels. The funds have bought already issued stock in the open market.

One could just as easily go after any fund holding Nestle, InBev, or UniLever for investing in companies selling products in Cuba. (EWL, CHF, etc...)

The threatened legal action is a civil lawsuit, not a US government criminal action. There's a big difference. Pretty much anybody can sue anybody else over anything in a civil action. See the civil lawsuit filed to get the US Army to disgorge alien autopsy results, for example, or a student suing a high school teacher for waking him up in class.

 

[mews]

a student suing a high school teacher for waking him up in class.


Well, unless the snoring was a public health hazard, da guy had no right atall! n he wuznt gonna gv me my ckmk 4 atendunce, 2!


ta,
mews

 

[BunsGettingFirm]

This raises the question of why the 'free market' mavens have banned Internet gambling and are now set up to destroy anyone with less than six degrees of separation.

My belief is that unlike the land-based gambling establishments, the Internet based ones have not made enough campaign contributions. I don't see the difference between Internet based gambling vs. any other type from a moral stand point. If congress wants to make sure the gambling odds are fair on Internet gambling sites, then do that. Don't make a distinction on slots on Indian land = good and Internet gambling = bad.

 

[utrecht]

PartyGaming (aka Party Poker) is not open to US citizens. They closed to Americans when the UIGEA was passed. They are committing no crimes (not that the US has jurisdiction to tell a foriegn compay what to do anyway). Why would there be a problem with Vanguard buying stock in a publicly traded company on a foreign stock exchange just because what they are doing in their country would be illegal if they were doing it in our country?

We dont show nudity in commercials but most of the world does. Whats next? Vanguard cant buy stock in companies who use nudity in their overseas commercials?

 

[cute fuzzy bunny]

Can you provide a few examples of these commercials so that I can make a more informed decision?