Vanguard issued warning by NZ regulator over ASIC infringement notices

New Zealand’s Financial Markets Authority (FMA) has issued Vanguard with a formal warning for failing to disclose greenwashing infringement notices it received from the Australian Securities and Investments Commission (ASIC) last year.

The investment manager was issued with three infringement notices by Australia’s corporate regulator on 11 November 2022 relating to the product disclosure statements for the Vanguard International Shares Select Exclusions Index Funds.

ASIC said that it was concerned that these statements may have been liable to mislead the public by overstating an exclusion, or investment screen, which claimed to prevent investment in companies involved in significant tobacco sales.

As the three funds are also available to investors in New Zealand via the Trans-Tasman Mutual Recognition regime (MRSO regime), Vanguard was required to lodge a notice with the New Zealand Companies Office Disclose Register on or before 18 November 2022.

However, Vanguard filed its notice on 2 February 2023 following intervention from the FMA, 55 business days after the infringement notices were originally issued by ASIC.

In a statement released on Wednesday, the FMA said it was satisfied that Vanguard had materially failed to meet its obligations under New Zealand’s Financial Market Conduct Regulations through the firm’s failure to identify its obligations and to have adequate processes in place to ensure that it filed the required notice within the required timeframe.

“There are serious consequences for failing to meet these obligations, and Vanguard’s breach, if not addressed, could harm the integrity of the Trans-Tasman Mutual Recognition regime,” said Paul Gregory, FMA executive director of regulatory response.

“Compliance with the requirements of the MRSO regime supports fair, efficient and transparent markets in NZ, and the FMA will take regulatory action, where necessary. It is important that issuers taking advantage of the MRSO regime understand and attend to their obligations. In this case a formal, public warning was appropriate.”

A Vanguard spokesperson told InvestorDaily that the firm regrets its oversight in failing to comply with the necessary notification obligations to the FMA.

“We have a strong commitment to compliance and transparency at Vanguard, as well as meeting the expectations of our regulators and investors. These are principles that we continuously reinforce throughout our organisation,” the spokesperson said.

“We are taking this matter seriously — addressing it through investing in further training, enhanced resourcing, alongside expert support for international regulatory matters.”

Jon Bragg

Jon Bragg is a journalist for Momentum Media's Investor Daily, nestegg and ifa. He enjoys writing about a wide variety of financial topics and issues and exploring the many implications they have on all aspects of life.