The Oregon Division of Financial Regulation (DFR), a member of the North American Securities Administrators Association (NASAA), has joined a $17 million settlement with Edward D. Jones & Co. L.P. (Edward Jones) resulting from an investigation into the broker-dealer’s supervision of customers paying front-loaded commissions for Class A mutual fund shares in light of later moving brokerage assets into fee-based investment advisory accounts.
The four-year investigation was led by a working group of 14 state securities regulators and looked into Edward Jones’s supervision of customers moving from brokerage to advisory accounts in consideration of the 2016 U.S. Department of Labor (DOL) Fiduciary Rule that makes investment advice to retirement accounts subject to a fiduciary standard of care.
The investigation found that Edward Jones charged front-loaded commissions for investments in Class A mutual fund shares in situations where the customer sold or moved the mutual fund shares sooner than originally anticipated. The states found gaps in Edward Jones’s supervisory procedures in this respect.
As part of the settlement, Edward Jones will pay each of the 50 states; Washington, D.C.; the U.S. Virgin Islands; and Puerto Rico an administrative fine of approximately $320,000. In evaluating the supervisory failures and determining the appropriate resolution, the states considered certain facts such as the positive performance of the investment advisory accounts as compared to the brokerage accounts.
“In partnership with NASAA and other state securities regulators, we will continue to protect Main Street investors and ensure that companies operating in Oregon follow our securities laws,” said TK Keen, DFR administrator. “DFR appreciates the ongoing cooperation of Edward Jones throughout this investigation and settlement process. Firms that offer both brokerage and investment advisory services must ensure customers receive the services they need at a fair and transparent price.”
Anyone who believes they may have been a victim of financial mismanagement can contact DFR’s consumer advocates at 888-877-4894 (toll-free) or dfr.financialserviceshelp@