News
Vanguard Group Sued For Online Gambling Investments
Monday, 19 April 2010 02:45
Vanguard Group Inc. has had a legal action launched against it in a Delaware court by shareholders trying to recoup monies invested in fallen online gambling companies.
In 2006 when the US government made the decision to outlaw online gambling, there were a large number of online gambling companies who were stock market listed and internationally recognised that had their assets effectively left in tatters. The resulting prohibition has left a fall out creating significant revenue losses for those who had invested in what was then a growing and legal industry.
It was recently reported that the company along with its controlling executives had allegedly invested these monies unwisely in four online gambling companies that were hosted in offshore locations. There was a similar case filed unsuccessfully in Manhattan in 2008 where the presiding judge ruled the Vanguard Group could not be held responsible for the losses of shareholders but this was instead caused by the government crackdown ruining the online gambling firms.
In New York and Missouri similar actions were filed against American Century Investments based in Kansas City, as was one in California against Causeway Capital Management LLC, based in Los Angeles. In fact, none of these law suits were successfully won by Thomas Sheridan, the New York attorney who wants to ensure that mutual fund companies are held accountable.
The suit has been filed against Vanguard International Equity Index Funds along with Vanguard Horizon Funds by Deanna Parker from South Carolina and Marylynn Hartsel from Florida. They are acting on behalf of the investors who purchased shares in those funds prior to 17th July 2006.
It has been reported that the plaintiffs are claiming that prior to the 2006 law being passed, Vanguard investors should have been aware of the many warning signs, which included a notice in PartyGaming's 2005 prospectus that authorities saw its activities as illegal. Neteller's 2004 prospectus had similarly clarified online gambling as being considered to be an illegal activity.
The suit contends that those investment companies were aware they were in violation of United States laws by making investments in PartyGaming, Bwin Interactive Entertainment, Sportingbet and Neteller. A spokesperson for Vanguard has said the company believes the plaintiffs' case lacks merit and they have every intention of defending the matter vigorously.
