Vanguard quietly makes two definitive moves -- replacing its rookie chief legal officer after a year of legal scrapes, and naming leaders of its 'parallel' plan to split fund management into two teams
The Malvern, Pa. firm poached Principal's CLO, Natalie Lamarque, while Glenn Booraem and Carolyn Cross will head the newly created investment management teams
5 min read
Brooke's Note: Maybe Vanguard is done with being polite in the legal sphere. The giant asset manager is hardly anybody's idea of a corporate reprobate, but it is a huge, huge target both for lawsuits and for regulators. It has deep pockets, and it doesn't want its name dragged through the mud in lengthy proceedings. It has done a host of settlements of late with lawsuits still pending. But a good offense is sometimes a good defense, and it just replaced its chief legal officer with a former federal prosecutor. Meanwhile, Vanguard is plowing ahead with creating a blue and red investment management team to create some intramural rivalry and the energy that may come with it. Cultivating competition or maybe even controlled [legal, regulatory] combat can work, but CEO Salim Ramji will test himself in the process.
After a year when the law won, Vanguard Group just replaced its one-year chief legal officer with another similarly, exemplary credentialed successor, with at least one big difference – some fighting experience as a prosecutor.
The Malvern, Pa., asset manager named Natalie Lamarque as its new CLO simultaneously while bidding farewell to Tonya T. Robinson who was CEO Salim Ramji's first C-suite hire.
Salim Ramji alluded to Lamarque's gold-plated resume in making the announcement.
“She is a seasoned executive who brings exceptional legal expertise and a deep understanding of our industry and the global regulatory environment,” he said in a statement.
Vanguard also issued a corporate statement indirectly updating its wild plan to split its investment team in two, to be known as Vanguard Capital Management (VCM) and Vanguard Portfolio Management (VPM).
The statement detailed a plan for Glenn Booraem and Carolyn Cross to each lead a separate investment stewardship team tied to one of Vanguard’s two new investment advisors – VCM and VPM – beginning in 2026.
In game of chicken with the FDIC, feisty BlackRock refuses to join Vanguard's cave to passivity surrounding banks and forfeit Federal Reserve right to serve on bank boards
Legal challenges
On the legal and compliance front, Vanguard has seen it s share scuffles in the past year and is fresh off an embarrassing settlement with the Securities and Exchange Commission (SEC). See: Vanguard scores 'own goal' for getting snared in a regulatory snafu and fined $19.5 million for failing to adequately disclose a conflict of interest over advisor incentives to funnel clients into its in-house RIA
Earlier this month (Sept. 9), it settled for $25 million a separate matter for allegedly sticking target-date fund investors with inflated tax bills.
It's gotten shoved around by the FDIC over how many bank holding stocks it can own and still call itself an indexer. See: In game of chicken with the FDIC, feisty BlackRock refuses to join Vanguard's cave to passivity surrounding banks and forfeit Federal Reserve right to serve on bank boards
And in July, the founders of a firm it had just acquired, Just Invest, sued, alleging Vanguard sabotaged a promised payoff by cutting fees and scuttling new business.. See: Vanguard sued by direct-indexing founders for allegedly cajoling a deal for Just Invest where the payoff came from hitting targets that the fund giant, allegedly, impeded -- actively and passively
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Prosecutorial chops
What jumps out on LaMarque's resume is that she previously served as an Assistant U.S. Attorney in the Southern District of New York. It's considered the Justice Department's premiere office and has a reputation for exceptionally aggressive white-collar criminal prosecutions.
In a massive overhaul, Vanguard will split its $10.4 trillion in funds between two 'distinct' management teams with separate trading desks potentially trading against each other, analyst says
For Ari Sonneberg, partner at Wagner Law Group, what jumps out more is her finacial background.
“The new recruit seems to have a much more robust background in the financial world compared to her predecessor, who seemed to have more of a governmental background,” he says. “This could signify not only a new face for Vanguard’s legal team, but perhaps also, a desire to shift legal strategy and tactics.”
She served since 2022 as general counsel of Principal Financial Group, and also worked in the litigation department of Debevoise & Plimpton LLP, one of New York City's top, white-shoe law firms.
Principal was not without legal challenges and had to pay $7 million to resolve a FINRA complaint involving fraud, breach of fiduciary duty, and negligence among other charges over annuity sales.
"I thank Tonya for her service to our clients and crew," Ramji said in a release without explaining her short tenure. "We are grateful for her contributions and wish her success in the future."
Divide and conquer
In his newsletter, The Independent Vanguard Adviser, Jeff DeMaso this week noted the Vanguard confirmed that the investment and stewardship changes are “running on parallel timelines.”
“By next April, Vanguard’s investment team will operate as two distinct units—each in its own building, with its own stewardship group,” he added.
RIABiz previously reported on the move but the timeline had been vague. See: In a massive overhaul, Vanguard will split its $10.4 trillion in funds between two 'distinct' management teams with separate trading desks potentially trading against each other, analyst says
The outcome of such a novel approach is far from assured, DeMaso notes.
“The challenge is clear: Maintain two world-class stock indexing operations without letting costs creep up or its competitive edge slip.”
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