Vanguard Group, the world’s largest issuer of mutual funds, has been fined and censured by FINRA for errors appearing in about 8.5 million customer account statements. It ordered Vanguard to pay a fine of $800,000.

FINRA said Vanguard had overstated projected yield and projected annual income for nine money-market funds. From at least October 2019 to June 2021, certain Vanguard account statements inaccurately presented market appreciation/depreciation and investment returns.

Additionally, the company failed to reasonably supervise its account statements by failing to address customer reports of inaccuracies in a timely way.

Technical glitch

FINRA said a technical glitch was to blame, as 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%.

In May and June 2021, the company corrected the errors and subsequent statements contained correct information. After FINRA began its investigation, Vanguard self-reported to the regulatory organization’s staff that other errors affected the presentation on certain account statements.

Miscalculated

From November 2019 to October 2020, approximately 50 customers contacted the company to alert it that it miscalculated the estimated annual yield and estimated annual income for a money market fund on account statements.

Despite this feedback from customers, Vanguard failed to promptly investigate whether the yield data used to calculate the estimated yield and annual income for money market funds on account statements was correct, FINRA said.

After the issue was brought to the attention of senior management, in or about October 2020, Vanguard corrected the error, the agency said.

FINRA notes in its Letter of Acceptance, Waiver, and Consent with Vanguard that a firm’s duty of supervision includes the responsibility to reasonably investigate red flags that suggest misconduct may be occurring.

A violation of FINRA Rule 3110 (Supervision Rule) is also a violation of FINRA Rule 2010 (Standards of Commercial Honor and Principles of Trade Rule), FINRA said.