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I don't understand the central claim of this lawsuit:

"Vanguard is cheating state and federal tax authorities by charging its customers much less than other fund companies do."

This simply isn't true. A list of the 100 lowest ETFs [1] shows several form the Schwab near the top of the list.

[1] http://etfdb.com/compare/lowest-expense-ratio/

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This list is incomplete. I own some VSTAX (Vanguard, .04%) and FUSEX (Fidelity, .04%) etfs, neither are on this list. I've seen even lower mentioned at Vanguard (The "institution" version of VSTAX, .02%)

I assume by VSTAX you mean VTSAX? That is on there as the ETF version is VTI. And institutional versions of the fund are not ETFs... they are only available to institutions, and for the .02% rate, you need to invest 100MM, which is the opposite of being exchange traded.

You can't really compare costs of managed funds and ETFs.

> You can't really compare costs of managed funds and ETFs.

You seem to be conflating management style with how something is traded. ETF just means it is traded on an exchange. An ETF can be actively managed. And a mutual fund can be passively managed.

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