(Reuters) -The U.S. Federal Deposit Insurance Corporation (FDIC) said on Friday it has entered into a passivity agreement with Vanguard to help the regulator better guard the money manager’s interests in major banks.
Under the deal, Vanguard is strictly prohibited from engaging in activities that influence the management or policies of institutions regulated by the FDIC, or their affiliates.
Through ‘passivity agreements’, investors undertake to the regulators that they will not influence the banks in which they have an interest.
FDIC will now monitor Vanguard’s investment activities, especially any informal interactions Vanguard has with the management of FDIC-regulated banks.
“Vanguard is built around passive investing and has long been committed to working constructively with policymakers to ensure passive means passive,” a Vanguard spokesperson said.
(Reporting by Prakhar Srivastava in Bengaluru; Editing by Shinjini Ganguli)
