Photo: Mr. Satterly
Edward Jones has agreed to pay $17 million to settle charges following a four-year investigation by 14 state security regulators.
The investigation show that the firm didn’t adequately supervise situations where customers paid upfront commissions for Class A mutual fund shares and later moved the investments into fee-based advisory accounts. Those affected were some customers who sold or moved their mutual fund shares sooner than expected. The states found gaps in Edward Jones’s supervisory procedures in these cases.
The settlement focused on cases where customers had shifted to advisory accounts within two or three years of purchasing Class A shares and weren’t fully reimbursed for the upfront commission, according to an order from Washington state.
Edward Jones, for example, offered fee reductions for those customers for one or two years, but they weren’t sufficient to cover the full upfront commission that in some cases was as much as 5 percent.
The state regulators took action under the U.S. Department of Labor’s Fiduciary Rule that requires retirement advisors act in the best interests of their clients and put their clients’ interests above their own.
“Firms that offer both brokerage and investment advisory services should be mindful that customers are receiving the services the customer wants at an appropriate price,” Charlie Clark, director of the Washington State Department of Financial Institutions, said in a statement.
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 about $320,000.
