Good summary, but you left out the Plaintiff&#x27;s argument.  Their argument is ridiculous but it bears summarizing.<p>The law requires transactions between affiliated businesses to be &quot;arms-length&quot; [1].  That means that both parties come to an agreement freely and independently and that the agreement not be influenced by a special relationship between the entities.  Without this rule, you can run into situations that allow companies to dodge taxes.  Apple and many other companies do this all the time to take U.S. profits and funnel them to Ireland to avoid paying U.S. taxes [2].<p>Plaintiffs are arguing that Vanguard is violating the transfer pricing rules by having its holding company charge its mutual fund affiliates fees that are substantially lower than market rates.  In fact, their argument is that Vanguard is charging 0.20% of assets managed when it should be charging 0.75% of assets managed which they claim is the market rate.  Plaintiffs further claim that by charging lower than market rates due to their special relationship that Vanguard owes $34.6 billion in back taxes from 2007 to 2014.  As such, Plaintiff would be entitled to $10 billion commission by bringing this to the government&#x27;s attention.<p>And that brings us to why Plaintiff is doing this.  They know the odds are so ridiculously stacked against them but it&#x27;s a cheap lottery ticket for a chance to win $10 billion.  And if they can put enough FUD into news articles about Vanguard [3] they just might be able to convince Vanguard to settle for a few tens of millions to make them go away.<p>[1] <a href="https:&#x2F;&#x2F;www.irs.gov&#x2F;pub&#x2F;int_practice_units&#x2F;ISI9422_09_06.PDF" rel="nofollow">https:&#x2F;&#x2F;www.irs.gov&#x2F;pub&#x2F;int_practice_units&#x2F;ISI9422_09_06.PDF</a><p>[2] <a href="https:&#x2F;&#x2F;en.wikipedia.org&#x2F;wiki&#x2F;Double_Irish_arrangement" rel="nofollow">https:&#x2F;&#x2F;en.wikipedia.org&#x2F;wiki&#x2F;Double_Irish_arrangement</a><p>[3] <a href="http:&#x2F;&#x2F;www.reuters.com&#x2F;article&#x2F;vanguard-lawsuit-taxes-idUSL1N11V1FK20150925" rel="nofollow">http:&#x2F;&#x2F;www.reuters.com&#x2F;article&#x2F;vanguard-lawsuit-taxes-idUSL1...</a>