Edward Jones Agrees to $17M Settlement Following Multistate Investigation into Fee-Based Advising Practices
PORTLAND, Ore. — Edward D. Jones & Co. L.P., commonly known as Edward Jones, has agreed to a $17 million settlement with 14 state securities regulators following a four-year investigation led by Oregon’s Division of Financial Regulation (DFR). The inquiry centered on the firm’s practices of transitioning clients from brokerage services to fee-based advisory accounts, particularly regarding the suitability of charges applied during these transitions.
Key Findings of the Investigation
The investigation, conducted under the North American Securities Administrators Association (NASAA), scrutinized Edward Jones’s adherence to fiduciary standards introduced under the 2016 U.S. Department of Labor Fiduciary Rule. These standards required financial advisers to act in the best interests of clients, especially concerning retirement accounts.
At issue was Edward Jones’s use of front-loaded charges for Class A mutual fund shares. Regulators found these fees problematic when clients transferred or sold shares prematurely, as such actions undermined the long-term financial benefits promised under fee-based advisory accounts. The investigation also revealed insufficient oversight measures to prevent such practices.
Settlement Highlights
As part of the settlement, Edward Jones will distribute approximately $320,000 to each U.S. state, Washington, D.C., the U.S. Virgin Islands, and Puerto Rico. The resolution aims to address supervisory lapses identified in the investigation and ensure compliance with fiduciary obligations.
“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. Keen also praised Edward Jones for cooperating throughout the investigation and settlement process.
Investor Protections and Next Steps
The settlement underscores the importance of fair and transparent financial practices, especially in managing transitions between brokerage and advisory accounts. The DFR has reiterated its commitment to safeguarding investors and encourages anyone who suspects financial misconduct to contact their consumer advocates at 888-877-4894 or via email at [email protected].
Broader Implications for the Industry
This resolution serves as a reminder for financial firms to ensure robust supervisory systems and prioritize the interests of their clients. As regulatory scrutiny intensifies, firms offering both brokerage and advisory services must ensure compliance with fiduciary standards to maintain trust and integrity within the financial advisory industry.
Reference News :- Edward Jones settles $17 million multistate enforcement case led by Oregon regulators