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Company Lawsuit Blames Online Gambling Companies - 09-08-08 |
September 8 - In the case of McBrearty versus the Vanguard Group at the District Court of Manhattan, it was claimed this week that executives of the group made illegal investments in online gambling companies and caused significant losses for shareholders.
According to the lawsuit, the executives of the second largest stock and mutual funds managing business in the United States, invested millions of dollars in companies that ran online betting services. These companies were banned in the United States at present.
The complaint went on to name ten people involved in the investments, including the Vanguard Group's Chief Investment Officer George Sauter, its portfolio manager Duane Kelly and eight other trustees. These people have been accused of violating the country's racketeering laws and breaching their fiduciary duties to their investors by purchasing stock in online betting companies.
"Defendants caused the funds to become owners of illegal gambling businesses," read the complaint issued on behalf of investors in at least two Vanguard managed funds.
A spokesperson for the Vanguard Group, Rebecca Cohen, declined to comment except to say that the company had not been served with the complaint.
Industry analysts are curious about which online gambling companies were involved in this case, as none are specifically mentioned in the lawsuit. One such option is BetonSports, a now defunct London-based gambling companies that saw its founder and Chief Executive Officer arrested by United States authorities, and are still awaiting trial.
PartyGaming has confirmed that the Vanguard Group bought into some of its shares but could not shed light on the other companies involved in this lawsuit.
PartyGaming operates Party Poker. Read our Party Poker review.
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