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Vanguard Advisers Inc. has agreed to a $19.5 million settlement with the U.S. Securities and Exchange Commission after the agency accused the firm of hiding conflicts of interest tied to its popular managed account service.

The SEC alleged Vanguard misled clients between 2020 and 2023 about how its financial advisers were incentivized to push customers into its Personal Advisor Services (PAS) program, which generates ongoing fees.

Conflicting Disclosures Exposed

PAS advisers, according to the SEC, were eligible for bonuses, raises, and promotions depending on how many clients they signed up and retained. Yet Vanguard’s official disclosures painted a contradictory picture.

• Brochures admitted some incentive structures existed.

• Other documents and website claims insisted advisers had “no outside incentives” and acted only in clients’ best interests.

The SEC said this web of conflicting disclosures masked real financial motivations and breached the Advisers Act.

A Pattern of Regulatory Trouble

The settlement not only includes the multimillion-dollar penalty but also a formal censure against Vanguard. The firm also agreed to adopt stronger compliance procedures.

This deal follows a $106.4 million settlement in January, when Vanguard was forced to resolve allegations it misled retirement investors about unexpected capital gains taxes triggered by restructuring its Target Retirement Funds.

Regulators Call Out Misleading Practices

The SEC criticized Vanguard for failing to adopt proper policies to ensure accurate client disclosures. By advertising its PAS advisers as purely salaried and free from commission-driven motives, regulators said, Vanguard lulled investors into believing they were shielded from conflicts that actually shaped adviser recommendations.

“Vanguard’s portrayal of advisers as conflict-free was simply inaccurate,” the SEC order stated.

Legal Teams and Next Steps

Vanguard is represented in the matter by Andrew J. Ceresney and Julie M. Riewe of Debevoise & Plimpton LLP. Counsel for the SEC was not immediately available.

The SEC declined to comment Friday, and Vanguard’s attorneys did not immediately respond to inquiries.

With this latest $19.5 million settlement, Vanguard’s reputation as a trusted low-cost giant in asset management faces another regulatory stain—proof that even titans of finance can falter when disclosure obligations collide with business incentives.