Vanguard Group Sued For Investing in USA Online Gambling

Published Sunday, April 11, 2010 -

When the government of the US decided to ban online gambling within it's borders many internationally recognized and stock market listed online gambling company's assets were effectively shredded. The fall out from the prohibition has shown significant losses of revenue for those who invested in the growing and at that time legal online gambling industry. A legal action has been launched by shareholders in a Delaware USA court to try to recoup some money from two of the Vanguard Group Inc.'s funds. Reuters news agency reported recently that, the company and it's controlling executives allegedly invested the money unwisely in four illegal online gambling operations hosted by offshore companies. In 2008 a similar court case was filed in Manhattan with no success as the presiding judge determined the Vanguard Group was not responsible for shareholder's losses but it was the US government crackdown which ruined the online gambling companies. Similar actions have been filed in Missouri and New York against Kansas City-based American Century Investments and in California against Los Angeles-based Causeway Capital Management LLC. None of these other law suits have been successfully won by New York attorney Thomas Sheridan who wants to see mutual fund companies held accountable. Vanguard International Equity Index Funds and Vanguard Horizon Funds are being sued by Marylynn Hartsel of Florida and Deanna Parker of South Carolina, who seek a class action status on behalf of investors who bought shares in the funds before July 17, 2006. Reuters reports tha the plaintiffs claim that even before the 2006 law was passed, investors from Vanguard should have heeded many warning signs, including a notice in the 2005 prospectus by PartyGaming that its activities were seen as illegal by authorities. Neteller also made it clear in its 2004 prospectus, that online gambling was to be considered an illegal activity in the USA.
The suit contends the investment companies knew they were violating U.S. laws by investing in Sportingbet, Bwin Interactive Entertainment, PartyGaming and Neteller. Vanguard, spokesperson, John Woerth, told Reuters, "We feel it is important to emphasize that Vanguard adheres to the highest ethical standards in every aspect of our business. We believe that the plaintiffs' case is without merit, and we intend to defend the matter vigorously."





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