Vanguard Sued Over Investors’ Tax Hit From Asset Selloff (2)

Vanguard Group and the trustees of its target date funds were accused in a lawsuit by individual investors of failing to shield them from “massive” tax bills that came their way after the company opened up some of its institutional funds to smaller shareholders.

The investors say they were hit with high capital gains taxes after Vanguard Chester Funds lowered the eligibility minimum for some of its low-fee institutional accounts from $100 million to $5 million.

The change created an “elephant stampede” of investors away from so-called retail funds into the institutional funds, according to the complaint.

The three investors ...