The Investor Protection Unit (IPU) of the Delaware Department of Justice has joined a $17 million settlement with Edward D. Jones & Co., L.P. (“Edward Jones”) resulting from a multistate investigation into the broker-dealer’s supervisory failures.
Customers paid front-loaded commissions for certain mutual fund shares despite later moving brokerage assets into fee-based investment advisory accounts.
“We expect investment firms operating in Delaware to follow our securities laws and to appropriately supervise their agents,” said Attorney General Kathy Jennings. “Firms that offer both brokerage and investment advisory services should ensure that customers receive services at an appropriate price.”
The four-year investigation examined Edward Jones’ supervision of customers moving from brokerage to advisory accounts. The move was prompted by the 2016 U.S. Department of Labor (DOL) 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.
As part of the settlement, Edward Jones will pay Delaware’s IPU an administrative fine of approximately $320,000. In evaluating the supervisory failures and determining the appropriate resolution, the states considered specific facts such as the positive performance of the investment advisory accounts as compared to the brokerage accounts.
Investors with concerns about the fees they are charged by financial professionals may submit complaints to the Investor Protection Unit by filling out the complaint form at https://attorneygeneral.delaware.gov/fraud/ipu/.
Peter Osborne has more than 15 years of experience as an award-winning business reporter and editor, leading two papers (the Delaware Business Times and Dallas Business Journal) to recognition as the nation’s most improved business publications. Osborne also helped launch The News Journal’s now-defunct Business Monday section and worked in communications and business development for MBNA America and Bank of America.
Source: delawarelive.com…