An investigation by the S.E.C. and several states found that the company had failed to notify investors of changes in the terms of some funds, leading to higher capital gains taxes.

The violations stem from a 2020 change where Vanguard lowered the minimum investment requirement for its institutional target date funds.

The SEC said a lack of notifications by Vanguard drove higher capital gains tax bills for many retail investors.

The $106.41 million penalty will be paid out to hundreds of thousands of investors, whom investigators say Vanguard failed to adequately inform of a critical change to its retirement funds.

Vanguard Group will pay more than $106 million to settle US Securities and Exchange Commission allegations that it made misleading statements about capital gains distributions and tax consequences to retail investors who held popular target-date retirement funds in taxable accounts.

Vanguard, one of the largest mutual fund companies in the United States agreed to pay investors $106 million, CNN reports.

The Malvern investment giant was accused of alleged misleading statements to retail investors in targeted retirement funds.

Vanguard agreed to pay $106.4 million to the Securities and Exchange Commission Friday to settle charges for “misleading statements” connected to its target retirement funds that resulted in higher taxes for retail investors,