Edward Jones fined $17M over customer transition fees

Edward Jones fees settlement overview:

• Who: Financial services firm Edward Jones agreed to pay $17 million to end an investigation into alleged supervisory failures.
• What: The investigation found the company overcharged customers who transitioned from its brokerage division to its advisory division.
• Where: The Edward Jones fees settlement was reached with regulators in 50 states.

Edward Jones agreed to pay $17 million to end an investigation involving claims the financial services firm overcharged customers who transitioned from its brokerage division to its advisory division. 

The investigation, which was looking into alleged supervisory failures that may have led Edward Jones to overcharge their customers, determined the firm failed to offset advisory fees for clients who had transitioned from more expensive brokerage services, reports Law360. 

A group of 14 state securities regulators led the four-year investigation into Edward Jones. The deal, meanwhile, was reportedly announced by the North American Securities Administrators Association (NASAA). 

“State securities regulators continue to lead the effort to ensure that firms always have their customers’ best interest in mind,” Leslie Van Buskirk, NASAA president and Wisconsin Securities Division administrator, said in a statement. 

Edward Jones kept $10M in brokerage commissions, states claim

The states argued Edward Jones ultimately retained more than $10 million in brokerage commissions that otherwise could have been used to offset fees for customers who transferred to advisory accounts between 2016 and 2018, reports Law360. 

The alleged failure to offset fees came after Edward Jones encouraged many of its brokerage clients to transfer into advisory accounts after the 2016 finalizing of a rule regarding fiduciary duty obligations imposed on retirement brokerage accounts, the states argued. 

The rule, which was finalized by the U.S. Department of Labor, subjected brokerage clients to some investment limitations, reports Law360. 

The states reportedly acknowledged Edward Jones took into account commissions paid over the prior two years when offering new advisory clients a prorated fee when purchasing shares as brokerage clients, but argued the offset wasn’t enough. 

The Edward Jones fees settlement agreement calls for the company to pay $320,000 to each of the 50 states, in addition to the District of Columbia., Puerto Rico and the U.S. Virgin Islands, reports Law360. 

Edward Jones reportedly has neither admitted nor denied the allegations against it by agreeing to the settlement. 

In a separate case, the Financial Industry Regulation Authority ordered Edward Jones — along with Osaic Wealth Inc. and Cambridge Investment Research Inc. — to pay more than $8.2 million in restitution to their customers last month to end claims they failed to provide available mutual fund sales charge waiver fees and fee rebates for mutual fund purchases. 

What do you think of the Edward Jones fees settlement? Let us know in the comments.

Read About More Class Action Lawsuits & Class Action Settlements:

• E-Trade class action claims co. underpaid interest in cash sweep program
• PNC class action claims cash sweep program paid low interest rates
• Wells Fargo seeks dismissal of class action over $300M Ponzi scheme
• Comenity Bank class action claims bank wrongfully obtained credit reports