Malvern-based Vanguard Group signed an agreement with the Federal Deposit Insurance Corporation to address concerns over growing too powerful, writes Joseph N. DiStefano for The Philadelphia Inquirer.
FDIC is the powerful bank regulator that can block even the biggest investors such as Vanguard from buying some must-have stocks.
Under the expanded agreement, Vanguard will supply the FDIC with a list of banks where it holds at least nine percent of the shares. The investment giant is near or above that threshold for hundreds of U.S. banks.
For banks where the Chester County company owns ten percent or more, Vanguard has pledged not to act as a controlling owner. This includes refraining from placing its representatives on boards, replacing top managers, increasing shareholder payouts, influencing corporate strategy, or pressuring shareholders to sway company decisions.
Vanguard will also assure the government of its “passive” role through detailed audits and bureaucratic reports.
FDIC director Jonathan McKernan, who has relentlessly pressed Vanguard on the issue, called the deal “a step in the right direction” and a win over “the concentration of power in a few institutional investors.”
Read more about Vanguard Group and its agreement with the Federal Deposit Insurance Corp in The Philadelphia Inquirer.
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