On August 29, 2025, the Securities and Exchange Commission (SEC) announced enforcement actions against Vanguard Advisers and Empower Advisory Group (along with Empower Financial Services), requiring the firms to pay a combined $25 million in penalties and disgorgement. The SEC found that both firms failed to adequately disclose how their financial advisors were compensated, creating hidden conflicts of interest for retail investors and retirement plan participants.
If you or someone you know has suffered significant investment losses working with Vanguard, Empower, or another brokerage firm, don’t hesitate to reach out to Meyer Wilson Werning today. Our attorneys are experienced in securities fraud cases and will help to guide you through the process with a free consultation to determine whether your losses are the result of actionable misconduct.
How Vanguard and Empower Misled Investors
The SEC found that both firms violated the Investment Advisers Act of 1940 and, in Empower’s case, Regulation Best Interest (Reg BI). These violations stemmed from failing to disclose how advisors were incentivized to enroll clients in fee-based managed account programs.
Vanguard’s Performance Review System
Between 2020 and 2023, Vanguard operated a performance system for its Personal Advisor Services (PAS) that factored in client enrollment and retention. These metrics directly influenced annual bonuses and merit raises for advisors. However, Vanguard’s disclosures created confusion:
- Some documents said PAS advisors could receive bonuses for enrolling clients.
- Others said they received no additional compensation beyond their salaries.
- Marketing materials claimed advisors had no outside compensation or financial incentives.
This contradiction meant investors may not have understood that their advisor’s recommendations were tied to enrollment targets.
Empower’s Retirement Plan Advisors
From 2019 to 2022, Empower evaluated advisors partly on the amount of client assets enrolled in managed accounts. These asset-based goals varied by territory and plan, but disclosures to retirement plan participants failed to reflect this. Instead, advisors often described themselves as “salaried and/or noncommissioned,” which omitted the financial incentives behind their recommendations.
The SEC noted that such omissions made advisors’ statements misleading, even if the firm argued that the omissions were negligent rather than intentional.
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SEC Findings and Penalties
The SEC orders detailed how both firms failed to adopt policies to prevent misleading statements and to ensure full disclosure of conflicts of interest.
- Vanguard – Violated Sections 206(2) and 206(4) of the Advisers Act and Rule 206(4)-7. Ordered to pay a $19.5 million civil penalty, to be distributed to affected clients through a Fair Fund.
- Empower Advisory Group and Empower Financial Services – Violated Section 206(2) of the Advisers Act and Reg BI. Ordered to pay $5,989,969.94 in disgorgement, prejudgment interest, and penalties, also to be distributed to harmed plan participants.
While neither firm admitted wrongdoing, both have taken steps to address the SEC’s concerns. Vanguard removed misleading statements and updated its disclosures, while Empower eliminated asset-based advisor goals and overhauled compliance procedures.
These penalties underscore the seriousness of disclosure failures. Even if no specific investor harm was documented, the SEC stressed that investors have the right to clear and consistent information about advisor compensation.
To learn more about Regulation Best Interest (Reg-BI) and how it works to protect investors, watch our video below:
Why This Matters for Investors
Conflicts of interest around compensation are among the most common causes of misleading financial advice. Advisors who stand to earn more by steering clients into certain programs may not act solely in the investor’s best interest.
For investors, this case highlights the need to:
- Request written disclosures about advisor pay structures.
- Watch for contradictory statements—such as assurances of being “noncommissioned” when financial incentives exist.
- Act if losses occur by consulting a securities attorney, since hidden conflicts may form the basis for legal claims.
Even when penalties are imposed, settlement funds may not fully address individual losses, making independent claims essential for recovery. If you were not properly informed about the risks involved, you may be eligible to recover some or all of your losses.
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How Meyer Wilson Werning Helps Investors
When major firms like Vanguard and Empower fail to disclose conflicts, it is investors who bear the risk. At Meyer Wilson Werning, we represent investors harmed by misleading statements, hidden compensation structures, and unsuitable recommendations. If you relied on advice from an advisor at Vanguard, Empower, or another firm and suffered financial losses, contact our team and we will review your case and pursue recovery.
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Frequently Asked Questions
Why did the SEC fine Vanguard and Empower a combined $25 million in 2025?
The SEC found that both firms failed to disclose how advisor pay structures created conflicts of interest in recommending fee-based managed accounts. These omissions violated securities laws and misled investors about advisor incentives.
How did Vanguard’s advisor compensation system mislead clients?
Between 2020 and 2023, Vanguard linked advisor bonuses to client enrollment in Personal Advisor Services, despite claiming otherwise in disclosures and marketing. This contradiction left investors unclear about whether advice was truly unbiased.
What specific misconduct did Empower advisors engage in?
From 2019 to 2022, Empower advisors were evaluated on asset enrollment goals but told retirement plan participants they were “salaried and/or noncommissioned.” The SEC ruled this omission made their statements misleading.
What penalties did Vanguard and Empower face as part of the SEC settlement?
Vanguard paid $19.5 million and Empower paid nearly $6 million in disgorgement, interest, and penalties. The funds will be distributed through Fair Funds to affected investors and plan participants.
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