What if Vanguard went bust?

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What if Vanguard went bust?

Postby Kelly » Tue Jan 29, 2013 8:26 am

This question has been asked before but without a clear answer.

I get this question from folks when I tell them they're better off putting all their money in a portfolio of Vanguard ETFs. My thinking is that, in the unlikely event of a non-fraud type failure, the person still owns the securities that comprise the ETF and the Vanguard "wrapper" would come off but the securities would still be there. I'm really not sure how it would play out but this is the best response I can come up with.

Does anyone know the legal answer??

Kelly
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Re: What if Vanguard went bust?

Postby The Wizard » Tue Jan 29, 2013 8:28 am

You should probably check with the SEC about this...
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Re: What if Vanguard went bust?

Postby Johm221122 » Tue Jan 29, 2013 8:31 am

The securities are held by 3 rd party, creditors would not have legal claim to assets held by each fund.Lots of posts explain this
http://www.google.com/search?sitesearch ... bankruptcy
Here is about. Com says
http://mutualfunds.about.com/b/2010/04/ ... w-what.htm
Here is Google search with many links
http://www.google.com/search?hl=en&redi ... 0&bih=1280
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Re: What if Vanguard went bust?

Postby Call_Me_Op » Tue Jan 29, 2013 9:03 am

Fraud is the much greater concern, IMO.
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Re: What if Vanguard went bust?

Postby Kelly » Tue Jan 29, 2013 10:47 am

Johm221122 wrote:The securities are held by 3 rd party, creditors would not have legal claim to assets held by each fund.Lots of posts explain this
http://www.google.com/search?sitesearch ... bankruptcy
Here is about. Com says
http://mutualfunds.about.com/b/2010/04/ ... w-what.htm
Here is Google search with many links
http://www.google.com/search?hl=en&redi ... 0&bih=1280
John


Thank you! Mel's article was very informative.
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Re: What if Vanguard went bust?

Postby Doc » Tue Jan 29, 2013 12:29 pm

I think the problem would be limited to an inability to access your assets for a period of time. When banks go under the regulators often step in over a weekend and by Monday morning some other bank has taken over so there is little delay. With a firm the size of Vanguard it might take a while longer and you also have a different regulator/insurer.
A scientist looks for THE answer to a problem, an engineer looks for AN answer. Investing is not a science.
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