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Rating:Vanguard Warns Southwest Pilots of 401(k) Trading Ban Not Rated 0.0 Email Routing List Email & Route  Print Print
Friday, October 11, 2013

Vanguard Warns Southwest Pilots of 401(k) Trading Ban

News summary by MFWire's editors

The war between fund giants and investment newsletters is heating up.

This time, it's Vanguard warning the 1,000 Southwest pilots (out of a total 8,000 total pilots at the airline) who subscribe to a monthly newsletter called 401k Maximizer from purchasing the three Vanguard funds in their union's retirement plan, according to Reuters.

The newswire reports that although fewer than 1,000 of the approximately 8,000 pilots in the Southwest Airlines Pilots' Association $2.6 billion 401(k) retirement plan subscribe to Maximizer, they can generate $30 million to $45 million of trades in each fund in the week after the newsletter changes its investment model. Such mass trades can disrupt fund managers, according to the newswire, which also reports that Vanguard typically asks investors to give it at least a day's notice before making large trades and imposes fees on frequent traders.

The move follows a similar ban T. Rowe Price imposed in August on 1,300 American Airline employees who were actively trading four T. Rowe funds in that airlines 401(k) plan following the advice of their airline employee newsletter EZTracker.  

Edited by: Tommy Fernandez


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