Oregon financial regulators have recently participated in a $17 million settlement with the prominent brokerage firm Edward D. Jones & Co. L.P. (Edward Jones), addressing issues with the firm’s practices related to mutual fund sales. The settlement emerged from a multi-state investigation led by the Oregon Division of Financial Regulation (DFR), the North American Securities Administrators Association (NASAA), and 13 other state regulators, as per the Oregon Department of Consumer and Business Services.
The probe, which took four years, scrutinized how Edward Jones supervised its clients' transitions from brokerage services to advisory accounts, particularly in light of the 2016 U.S. Department of Labor Fiduciary Rule that imposes a stricter fiduciary standard on retirement account advice. According to a statement by the DFR, the investigation found supervisory failures at Edward Jones in overseeing customers who paid front-loaded commissions on Class A mutual fund shares, potentially suggesting customers sold or shifted those shares earlier than expected. However, the firm's investment advisory accounts did generally perform well.
Under the settlement terms, Edward Jones is on the hook to distribute funds across all 50 states, alongside Washington D.C., the U.S. Virgin Islands, and Puerto Rico, with the penalty per jurisdiction totaling around $320,000. This comes after officials identified discrepancies in Edward Jones's monitoring procedures, which meant some customers may not have received the most suitable service for their investment needs.
TK Keen, DFR administrator, emphasized the importance of this enforcement action. "In partnership with NASAA and other state securities regulators, we will continue to protect Main Street investors and ensure that companies operating in Oregon follow our securities laws," Keen said, as cited by the Oregon Department of Consumer and Business Services. The administrator also acknowledged Edward Jones's cooperation throughout the investigation and subsequent settlement process, with firms offering brokerage and investment advisory services ensuring customers receive the services they need at a fair and transparent price.
