Efforts on the part of the Vanguard Group of Malvern, Pa. to develop an exchange-traded share class may have been defeated last week after a U.S. District Court decision prohibited Vanguard from offering the new share class using its S&P index funds, according to industry observers.

The decision rendered by the U.S. District Court for the Southern District of New York limits Vanguard's options in developing the product and could force Vanguard to scrap its plans before the share class is ever issued, according to Daniel P. Wiener, editor of the monthly newsletter, The Independent Adviser for Vanguard Investors.

Subscribe Now

Access to premium content including in-depth coverage of mutual funds, hedge funds, 401(K)s, 529 plans, and more.

3-Week Free Trial

Insight and analysis into the management, marketing, operations and technology of the asset management industry.