Edward D. Jones & Co. will pay Utah about $320,000 to conclude a multi-year investigation into the investment firm’s business practices. The settlement is part of a $17 million nationwide agreement.
The settlement agreement follows a four-year investigation led by 14 state securities regulators, including the head of Utah’s Division of Securities, part of the Utah Department of Commerce.
The investigation found Edward Jones front-loaded commissions for Class A mutual fund shares when customers sold or transferred the shares sooner than originally planned. It also found the firm had gaps in supervision.
A spokesperson for the firm said it agrees with regulators that protecting investors is key.
“We are committed to maintaining robust supervisory and compliance systems and continually improving them,” an emailed statement said.
Edward Jones has about 19,500 financial advisers across the country, including 88 in Utah, giving financial advice to more than 8 million individual investors, according to the firm. The spokesperson didn’t indicate how many of those investors live in Utah.
The states argue in an order related to the settlement that the firm retained millions in brokerage commissions that otherwise could have offset fees for customers who transferred to advisory accounts between 2016 and 2018.
Edward Jones allegedly failed to offset fees when encouraging clients to transfer after the finalization of a 2016 U.S. Department of Labor rule regarding fiduciary duty obligations imposed on retirement brokerage accounts, including limitations on trading, the administrative order reads.
Regulators in Utah and other states said the firm failed to establish and maintain a supervisory system meant to comply with securities laws and regulations.
As part of the settlement, Edward Jones will pay an administrative fine of about $320,000 to Utah and the other 49 states, Washington, D.C., the U.S. Virgin Islands and Puerto Rico.
Utah will get $320,754.72, according to a spokesperson for the commerce department, and the funds will go into the Investor Education Fund. That fund is designated for enforcement actions and educating consumers about safe investment practices, including outreach efforts specifically aimed at preventing fraud and other predatory behaviors.
Margaret Woolley Busse, executive director of the Utah Department of Commerce, said the settlement reflects that state’s commitment to protecting Utah investors.
“We will continue to work with our regulatory partners to ensure that Utah’s securities markets operate fairly and transparently,” Busse said in a statement.
