NEW YORK — Vanguard Group and American Century Investments are facing separate class-action lawsuits over losses allegedly sustained by mutual fund investments in illegal online gambling businesses.
Thomas I. Sheridan III, an attorney with the New York-based Hanly Conroy Bierstein Sheridan Fisher & Hayes LLP, one of the law firms representing plaintiffs in both cases, estimated that both firms' funds sustained capital losses in excess of $10 million after the government arrested principals of those gambling enterprises in a crackdown that began in 2006.
The online firms in question include Sportingbet PLC and Partygaming PLC, both based in the U.K.
According to the complaints, the funds involved were the $32.5 billion Vanguard European Stock Index fund, the $6.5 billion Vanguard Global Equity fund and American Century's $7.5 billion Ultra fund. The lawsuits allege that by causing fund investors to become owners of illegal gambling businesses, those firms and responsible individuals cited as defendants violated both their fiduciary duties and the Racketeer Influenced and Corrupt Organizations Act.
The suit against Vanguard Group was filed in U.S. District Court in Southern New York, while the suit against American Century was filed in U.S. District Court in Northern California.
Mr. Sheridan said the lawsuits are seeking compensatory and punitive damages as well as forfeiture and disgorgement of commissions, fees and profits received by the defendants.
In separate statements, Vanguard and American Century said they believe the lawsuits are “without merit” and promised to defend themselves “vigorously.”
