Edward D. Jones & Co. has agreed to pay $17 million to settle charges from multiple state securities regulators that it wrongfully charged commissions on certain mutual fund sales, according to an announcement on Wednesday. 

Bạn đang xem: State Regulators Fine Edward Jones $17 Million for Mutual Fund Overcharges

The North American Securities Administrators Association, which represents state securities regulators, accused Edward Jones of improperly charging upfront commissions on Class A mutual fund shares in cases where customers soon after moved those assets into investment advisory accounts that assess an annual fee. 

A four-year investigation led by 14 state regulators “found gaps in Edward Jones’s supervisory procedures in this respect,” according to NASAA’s announcement. The settlement focused on cases where customers had shifted to advisory accounts within two or three years of purchasing Class A shares and were not fully reimbursed for the upfront commission. 

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Edward Jones, for example, offered fee reductions for those customers for one or two years, but they were not sufficient to cover the full upfront commission that in some cases was as much as 5%, according to an order from Arkansas. 

“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 Enforcement Section Committee Co-Chair Amanda Senn said in a statement.

Many customers had moved from brokerage to advisory accounts in light of the U.S. Department of Labor’s now-defunct fiduciary rule promulgated in 2016, NASAA noted. 

A spokesperson for Edward Jones said that investor protection is a “top priority” and that its advisors take a “personalized approach understanding our clients’ needs and objectives.”

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“We are aligned with regulators that protecting investors is a top priority, and we are committed to maintaining robust supervisory and compliance systems and continually improving them,” the spokesperson wrote in a statement. 

Senn, who is also the director of the Alabama Securities Division, also praised Edward Jones for its cooperation. The $17 million consists of separate $320,000 payments that Edward Jones will make to all 50 states, Washington D.C., U.S. Virgin Islands and Puerto Rico.

Last month, Edward Jones agreed to pay $4.4 million in restitution to customers as part of a settlement with the Financial Industry Regulatory Authority over separate mutual fund overcharge issues. 

Edward Jones, one of the largest firms by its 20,000 brokers, has been on a multi-year campaign to modernize its sales force in part by expanding its advisory account programs and financial planning.
–Karmen Alexander contributed to this story.