As far as I can tell, that case got dropped: http://articles.philly.com/2015-11-19/business/68386489_1_da... . Though it's still entirely possible that the IRS continues to pursue it separately (they haven't commented on the status of that), it no longer appears possible for the so-called "whistleblower" to pursue it directly or to collect.

> (On the other side of the argument: "rules are rules, and Vanguard has to comply with all of them, even the dumb ones.")

Granted; it's possible there's a "letter of the law" problem here, hence my comment that the tax argument isn't quite as ridiculous. However, in terms of actual justice being served, I don't think it's reasonable for an argument along these lines to apply to Vanguard but not to any random local co-op that serves its members. (I'm ignoring the second half of the complaint here about the "contingency fund", and focusing on the "not charging enough" argument, which seems far more obviously wrong in principle.)

The difference, as far as I can tell, is that co-ops have just the one legal entity owned by the individual members, whereas Vanguard involves a second corporate legal entity, due to the nature of how the funds own Vanguard; it's the same logical structure, but the legal entity topology differs, and that may make a difference. As far as I can tell, the laws trying to say "must charge market rates" (because charging less would mean paying less tax, and we can't have that...) refer to B2B transactions, not B2C transactions. I wonder why Vanguard structures its funds using two legal entities in this way, rather than a single legal entity directly owned by the funds it itself manages?

> Can you provide a link to the "dumping" argument, posed well, or by any credible market participant?

I can't seem to find a good isntance of it at the moment. I saw a few more recent instances of it in stories associated with the tax lawsuit, mentioned by random other fund representatives commenting on the suit. They struck me as the kind of comment made offhand, rather than a careful legal argument of any kind; however, I've seen that complaint in various contexts ever since I started following (and using) Vanguard myself, before I'd heard about the lawsuit.

The end of http://www.bloombergview.com/articles/2016-02-10/vanguard-is... makes a comparison between Vanguard's low fees and Costco members; that comparison isn't quite as accurate, since Costco charges its members a fee rather than being owned by its members, but it seems like the right line of reasoning at least.