(Washington, DC) – The DC Department of Insurance, Securities and Banking (DISB), a member of the North American Securities Administrators Association (NASAA), has joined 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 assets into fee-based investment advisory accounts. The District of Columbia will receive approximately $320,000 of this settlement money.
“In partnership with NASAA and other state securities regulators, and under the leadership of Mayor Muriel Bowser, DISB will continue to protect District of Columbia investors and ensure that companies operating in DC follow our securities laws,” said DISB Commissioner Karima Woods. “Settlements like this one allow District investors to have a fair shot when investing. 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.”
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. 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.
About DISB
The mission of the Department of Insurance, Securities and Banking (DISB) is three-fold:
(1) cultivate a regulatory environment that protects consumers and attracts and retains financial
services firms to the District;
(2) empower and educate residents on financial matters; and
(3) provide financing for District small businesses.
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