4-Year Investigation of Edward Jones Leads to $17M Settlement for 14 States and NJ

NJ Attorney General Joins $17M Nationwide Edward Jones Settlement; Brokerage Giant Faulted for Supervisory Failures in Converting Commission-based Accounts to Fee-based Advisory Accounts.

New Jersey Attorney General Matthew J. Platkin and the Division of Consumer Affairs announced that the New Jersey Bureau of Securities has joined a $17 million multistate settlement with Edward D. Jones & Co., L.P. (Edward Jones). The settlement follows a four-year investigation led by 14 state securities regulators into the broker-dealer’s oversight of financial professionals who converted investors’ commission-based brokerage accounts into fee-based advisory accounts.

Improper Fees and Supervisory Lapses

The investigation focused on a two-year period during which Edward Jones “supervised financial professionals who moved investors’ funds from brokerage to advisory accounts.” During that time Edward Jones improperly failed to credit them for commissions that had already been paid,” resulting in overcharging investors. Investigators also identified “gaps in how Edward Jones supervised the transfer of customer accounts and the imposition of fees on investors.

Settlement Terms and NJ’s Role

Under the agreement, each of the 50 states, Washington, D.C., the U.S. Virgin Islands, and Puerto Rico will receive an administrative fine of approximately $320,000. Given New Jersey’s leadership role in the investigation, the state will receive an additional $15,000 to cover investigative costs.

"The four-year investigation was led by a working group of 14 state securities regulators, including the Bureau of Securities,” according to the official announcement. The state’s Bureau of Securities operates within the Division of Consumer Affairs.

“Firms that offer both brokerage and investment advisory services must ensure that clients are receiving their desired services at an appropriate price,” said Elizabeth M. Harris, Bureau Chief of the Bureau of Securities. “Changes to a customer’s account type should be supervised correctly to ensure that they are not charged twice in the form of both a commission and an advisory fee.”

Investigation Team

The Bureau’s investigation was handled by Deputy Chief Amy Kopleton, Supervising Investigators Rachel Glasgow and Judith Keilp, and Investigator Perry Traina of the Bureau of Securities, within the Division of Consumer Affairs.

With the settlement finalized, investors impacted by these supervisory lapses will receive relief, and Edward Jones will be required to adhere to more rigorous oversight and fee-disclosure protocols going forward.