Multi-State Working Group Finds Supervisory Failures with Respect to Class A Mutual Fund Shares

WASHINGTON, D.C. – (January 8, 2025) – The North American Securities Administrators Association (NASAA) has announced 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 account 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 (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.

“Today’s settlement shows once again that state securities regulators will take decisive action to protect investors,” said NASAA President and Administrator of the Division of Securities, Wisconsin Department of Financial Institutions, 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 an administrative fine of approximately $320,000. 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.

NASAA Enforcement Section Committee Co-Chair Amanda Senn, Director, Alabama Securities Commission, commended her fellow state securities regulators for their work in investigating the matter that led to the settlement. “This settlement reflects the collaborative and determined approach state securities regulators take to resolve a national problem,” said Senn. “We appreciate 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.”

– NASAA –

About NASAA:

Organized in 1919, the North American Securities Administrators Association (NASAA) is the oldest international organization devoted to investor protection. NASAA is a voluntary association whose membership consists of the securities regulators in the 50 states, the District of Columbia, Puerto Rico, Guam, the U.S. Virgin Islands, the 13 provincial and territorial securities regulators in Canada, and the securities regulator in México. For more information, visit www.nasaa.org.

For More Information:

Fred Baldassaro, Director of Communications
fbaldassaro@nasaa.org | 202-737-0900

Karen Grajales, Manager, Communications and Investor Outreach
kgrajales@nasaa.org | 202-737-0900