Connecticut Banking Commissioner Jorge Perez on Dec. 20, 2024 issued a consent order directing the St. Louis-based broker-dealer Edward D. Jones & Co. LP to pay more than $333,000 to the state.
Of the $335,754.72 the firm paid to the state, $320,754.72 constituted an administrative fine and $15,000 is the state’s allocated share of the investigative costs involved in a multi-state settlement.
The action was an outgrowth of a $17 million multi-state enforcement settlement with the firm. That investigation focused on the financial advisor charging 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 investigation found that the firm failed to implement sufficient supervisory procedures to detect the irregularities. By the same token, the Perez alleged that the firm violated Section 36b-31-6f(b) of the regulations under the Connecticut Uniform Securities by failing to establish and maintain reasonably designed supervisory procedures.
The state of New Jersey Attorney General Matthew J. Platkin and the Division of Consumer Affairs also announced that the state’s Bureau of Securities had joined the multistate settlement with Edward D. Jones & Co., L.P. resulting from a probe into the broker-dealer’s supervision of financial professionals moving customers’ commission-based brokerage accounts to fee-based investment advisory accounts.
The four-year investigation was led by a working group of 14 state securities regulators, including the Bureau of Securities.
During a two-year period, Edward Jones supervised financial professionals who moved investors’ funds from brokerage to advisory accounts. The investigation found that when collecting advisory fees from these customers, Edward Jones improperly failed to credit them for commissions that had already been paid. As a result, investors were overcharged. The states also found gaps in how Edward Jones supervised the transfer of customer accounts and the imposition of fees on investors.
“My office will continue to protect individual investors by ensuring that firms comply with our securities laws,” said Attorney General Platkin. “New Jersey investors deserve the fullest protections under the law, including reasonable supervision over their investment accounts. Firms that fail to provide that will be held accountable.”
As part of the settlement, each of the 50 states, Washington, D.C., the U.S. Virgin Islands, and Puerto Rico will receive an administrative fine of approximately $320,000. New Jersey will also receive an additional $15,000 to cover investigative costs for its role as a leader in the investigation.
