Vanguard Managers Invested in Web Gambling, Suit Says

Vanguard Managers Invested in Web Gambling, Suit Says

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.

"Defendants caused the funds to become owners of illegal gambling businesses,'' according to the complaint. The plaintiffs seek class-action, or group, status on behalf of all similarly situated investors, plus unspecified compensatory and punitive damages.

Vanguard, based in Valley Forge, Pennsylvania, has more than $1.25 trillion in assets. Vanguard itself is a nominal defendant in the suit that plaintiff investors Deanna McBrearty and Marylynn Hartsel styled as an action brought on the company's behalf.

Rebecca Cohen, a Vanguard spokeswoman, said the company hasn't been served with the complaint and declined to comment. ...

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