MADISON, Wis. — The Wisconsin Department of Financial Institutions (DFI), a member of the North American Securities Administrators Association (NASAA), today announced Wisconsin 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-load 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 light of the 2016 U.S. Department of Labor Fiduciary Rule that would make investment advice to retirement accounts subject to a fiduciary standard of care.
The investigation found that Edward Jones charged front-load 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.
“This settlement shows once again that state securities regulators will take decisive action to protect investors,” said NASAA President and DFI Division of Securities Administrator Leslie Van Buskirk. “State securities regulators continue to lead the effort to ensure that firms always have their customers’ best interest in mind,” Van Buskirk added. “I want to thank the members of the multi-state working group for their diligence and hard work.”
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 approximately $320,000. Wisconsin will receive an additional $15,000 in administrative and investigatory costs. 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 Wisconsin follow our securities laws,” said DFI Secretary Cheryll Olson-Collins. “Our agency appreciates the ongoing cooperation of Edward Jones throughout this investigation and settlement process. 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.”
Wisconsin residents who have questions about this settlement should contact the DFI’s Division of Securities by calling (608) 266-2139 or emailing [email protected]. Residents can also visit BrokerCheck® to research the background and experience of financial brokers, advisers, and firms.
