Vanguard settles Republican states' antitrust suit for $29.5 million

By Ross Kerber

Feb 26 (Reuters) - Fund manager Vanguard Group said on Thursday it agreed to settle litigation filed by the Republican attorneys general of Texas, Kansas and other states, who had alleged the fund manager and rivals violated antitrust law through their climate activism.

In a press release, Kansas Attorney General Kris Kobach said the terms of the deal include Vanguard paying $29.5 million to the group of states that brought the suit to "support enforcement and consumer relief efforts."

Vanguard also "agreed to strict passivity commitments" prohibiting it from dictating the strategy of companies in which it invests or to pushing shareholder proposals related to environmental or social issues, Kobach said.

A spokesperson for Vanguard of Pennsylvania said it was prohibited from disclosing terms of the deal. The company said in a statement it reaffirms "the passive nature of our index funds."

Vanguard and rivals BlackRock BLK.N and State Street STT.N have faced pressure from Republican politicians, many from energy-producing states, to stop emphasizing issues such as corporate emissions or workforce diversity.

The fund management groups have supported fewer shareholder resolutions on those themes in recent years, and have faced reduced pressure in turn, including avoiding new regulations from the Trump administration at least for now.

Antitrust actions remain pending against BlackRock and State Street, Kobach said in his release, saying both companies "remain defiant."

BlackRock and State Street were not immediately available for comment.

Of the three large fund managers, Vanguard has in some cases shown the most willingness to come to terms with its conservative critics.

In 2024, for instance, it offered concessions to Federal energy regulators that had similarities with Thursday's agreement, such as an offer to refrain from submitting shareholder proposals.