Grand Canyon Times

The Arizona Corporation Commission (ACC) has announced its participation in a $17 million settlement with Edward D. Jones & Co., L.P., a securities dealer. This agreement is the outcome of a multi-state investigation into the company's supervision of customers who paid front-load commissions for Class A mutual fund shares and later transferred their brokerage assets to fee-based investment advisory accounts.

A group of 14 state securities regulators, part of the North American Securities Administrators Association (NASAA), led the four-year investigation. They examined how Edward Jones managed customers transitioning from brokerage to advisory accounts, especially in light of the 2016 U.S. Department of Labor Fiduciary Rule, which imposed a fiduciary standard on investment advice for retirement accounts.

The investigation revealed that Edward Jones charged front-load commissions for investments in Class A mutual fund shares even when customers sold or moved these shares sooner than expected. The states identified shortcomings in Edward Jones's supervisory procedures regarding this practice.

As per the settlement terms, Edward Jones will pay an administrative fine of approximately $320,000 to each state involved, including Washington, D.C., the U.S. Virgin Islands, and Puerto Rico. When evaluating these supervisory failures and determining an appropriate resolution, factors such as the positive performance of investment advisory accounts compared to brokerage accounts were considered.

Chairman Kevin Thompson stated: “In partnership with NASAA and other state securities regulators, we will continue to protect investors and ensure that companies operating in Arizona follow our securities laws.” He added that securities dealers offering both brokerage and investment advisory services should ensure their customers receive desired services at an appropriate cost.