Vanguard getting heat for "illegally investing in Internet gambling companies"

Several Vanguard executives may be in some trouble for investing in Internet gambling companies.

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Executives of Vanguard Group Inc., the second-biggest U.S. manager of stock and bond mutual funds, illegally invested client assets in companies running Internet gambling businesses banned in the U.S., according to a lawsuit.

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.

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Named in the suit are the Vanguard International Equity Index Funds, which does business as the Vanguard European Stock Index Fund, and the Vanguard Horizon Funds, which the complaint said is also known as the Vanguard Global Equity Fund.

``We don't have detailed information at the moment about what they actually paid and what they actually sold these investments for,'' (the plaintiff's lawyer Thomas) Sheridan said. He said the defendants could be liable for tens of millions of dollars in damages.

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Now Buzzy's not too clear on investment laws, but if the companies are publicly listed in another country (despite the US not liking them), doesn't that mean that people are allowed to invest in them?

Full story here ... http://www.bloomberg.com/apps/news?p...pz8&refer=home

If the US is on a witch hunt then they can use a wide range of laws to attack a company. They really could wipe out most of the industry if they wanted to. They don't have the resources to spare or the desire at the moment. Some people think that just because the UIEGA is hardly able to be used by the banks that the gov't gave up. Not so.