American Express Pays $108 Million To Settle Deceptive Marketing Charges
The U.S. Department of Justice announced on Thursday that American Express Co. AXP agreed to a $108.7 million settlement to resolve allegations of violating the Financial Institutions Reform, Recovery and Enforcement Act.
The Department of Justice accused the financial giant of deceptive marketing and falsified record-keeping between 2014 and 2021.
From 2014 to 2017, American Express allegedly misled small business customers regarding credit card rewards, fees and credit checks and submitted false income information.
Additionally, employees bypassed legal requirements by entering fabricated Employer Identification Numbers (EINs) on small business credit card applications during a product transition period.
From 2018 to 2021, American Express was further accused of misrepresenting tax benefits for its Payroll Rewards and Premium Wire programs. The firm charged above-market fees under false pretenses, regulators said.
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"When financial companies engage in deceptive sales tactics or falsify information to cover up a failure to follow applicable regulations, they threaten the integrity of our financial system," said Principal Deputy Assistant Attorney General Brian M. Boynton, head of the Justice Department's Civil Division.
"Today's settlement makes clear that the department will hold accountable those who violate the trust placed in them to follow the rules governing our financial institutions and to be truthful about their business practices," Boynton added.
The Vanguard Group Pays $106.41 MIllion To Settle Charges Related To Misleading Statements
The Securities and Exchange Commission on Friday announced that The Vanguard Group, Inc. will pay $106.41 million to settle charges for misleading statements related to capital gains distributions and tax consequences for retail investors who held Vanguard Investor Target Retirement Funds (Investor TRFs) in taxable accounts.
The SEC's order finds that due to the actions of Vanguard, retail investors of the Investor TRFs who continued to hold their fund shares in taxable accounts faced historically larger capital gains distributions and tax liabilities and were deprived of the potential compounding growth of their investments.
The order also finds that Vanguard Investor TRFs' prospectuses, effective and distributed in 2020 and 2021, were materially misleading.
"Materially accurate information about capital gains and tax implications is critical to investors saving for their retirements," said Corey Schuster, Chief of the Division of Enforcement's Asset Management Unit. "Firms must ensure that they are accurately describing to investors the potential risks and consequences associated with their investments."
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