Massachusetts securities regulators are investigating brokers offering target date funds after many of their investors were hit with unexpected tax bills.

The state’s Securities Division has sent letters requesting information from U.S. fund distributors Blackrock Investments, Fidelity Brokerage Services, T. Rowe Price Services, and Vanguard Marketing Corporation about potential tax disclosure issues related to mutual funds. target date placement of companies, said the Massachusetts Secretary of State. William Galvin announced today.

The companies made changes to the funds that “disproportionately impacted retail investors and resulted in some receiving heavy tax bills they did not expect,” Galvin said in a press release.

Brokers were given until Feb. 9 to hand over a long list of information, including all target date funds offered in the state, customer complaints and a description of any changes BDs have made to their minimums. investment required for the target. -date of mutual funds within the past two years, according to a copy of the letter obtained by Financial Advisor magazine.

Galvin also asked BD for all related disclosures and marketing and educational materials they offered when investors invested in these funds.

Galvin said he was particularly concerned about reports of poorly disclosed fund changes that shifted the financial burden to small investors, resulting in large tax bills for those who held the funds in non-retirement accounts. .

“As an example of how small investors can be disproportionately affected, it was recently reported that Vanguard had reduced the minimum investment in its institutional target retirement funds from $100 million to $5 million. , which has caused many plans to switch from standard funds to institutional target funds. . This caused the standard funds to offload holdings, triggering capital gains distributions to small dollar investors who remained, and some of those investors had the funds in taxable accounts,” Galvin’s spokeswoman said, Debra O’Malley.

“Financial institutions cannot be allowed to protect one class of investors at the expense of another,” Galvin said in a statement. “Investors need to be made aware of the risks involved and the tax liabilities they might face in certain circumstances, and I want to make sure that institutions are upfront about those risks.”

Target date mutual funds are often attractive to investors as a hands-off investment option because they change allocation as investors age. “Nevertheless, maturity mutual funds, like all investments, can lose money and can be risky. Management decisions by fund advisers can also negatively impact retail investors,” the securities division said in a statement.

American Funds, Blackrock and Vanguard did not immediately respond to a request for comment on the survey.