Edward Jones Consent Order - Retail Minimum Commissions

1 COMMONWEALTH OF MASSACHUSETTS OFFICE OF THE SECRETARY OF THE COMMONWEALTH SECURITIES DIVISION ONE ASHBURTON PL ACE, ROOM 1701 BOSTON, MASSACHUSETTS 02108 ______)))))))) IN THE MATTER OF: EDWARD D. JONES & CO., L.P. – RETAIL MINIMUM COMMISSIONS, RESPONDENT. Docket No. 2025-0191 CONSENT ORDER I. PRELIMINARY STATEMENT This Consent Order (the “Order”) is entered into by th e Securities Division of the Office of the Secretary of the Commonwealth of Massachus etts (the “Division”) and Edward D. Jones & Co., L.P. (“Edward Jones” or “R es po nd e nt ”) with respect to the above- captioned investigation by the Enforcement Section of the Division into whethe r Respondent’s acts and practices constituted v i olations of the Ma ssachusetts Uniform Securities Act, M.G.L. c. 110A (the “Act”), a nd the regulations promulgated thereunder at 950 CMR 10.00-14.413 (th e “ R eg ul at io n s”). As the re sult of a coordina ted investigation, with the Division serving as a lead state, th e Division concluded that Edward Jones charged unreasonable commissions on certain small prin c ipal equity transactions. Nationwide, Edward Jones charged unreasonable comm issions on approximately 781,240 equity transactions over a five -year period totaling $11,287,504. On May 19, 2025, Respondent subm itted an O ffer of Settlement (the “Offer”) to the Division. Respondent neither admits nor de nies the Statement of Facts set forth in

2 Section V below and neither admits nor denies the Violations of Law set forth in Section VI below, and consents to the entry of th is Order by the Division, consistent with the language and terms of the Offer, settli ng the above-captioned investigation (INV-2025- 0191) with prejudice. Pursuant to M.G.L. c. 110A, § 412(b), this Ord er “is necessary or appropriate in the public interest or for the protection of inve stors and consistent with the purposes fairly intended by the polic y and provisions of [the Act].” II. JURISDICTION AND AUTHORITY 1. The Division has jurisdiction ov er matters rela ted to securities pursuant to the Act and Regulations. 2. The Offer was made and this Order is en tered in accordance with the Act and Section 10.10 of the Regulations. 3. The acts and practices that are the subject of the Division' s inve stigation occurred while Edward Jones was registered as a broker-dealer in Massachusetts. III. RELEVANT TIME PERIOD 4. Except as otherwise expressly stated, the conduct described herein occurred during the approximate time period of May 1, 2020, to April 30, 2025 (the "Relevant Tim e Period"). IV. RESPONDENT 5. Edward D. Jones & Co. L.P. ("Edward Jones") is a broker-deal er registered in Massachusetts with a main address of 12555 Manchester Ro ad, St. Louis, Missouri 63131. Edward Jones is identified by Financial Industry Regulatory Aut hority ("FINRA") CRD No. 250. Edward Jones maintains approximate ly 190 branch offices in Massachusetts. V. STATEMENT OF FACTS

3 A. Edward Jones' Minimum Commission Pr actices for Equity Transactions Failed to Ensure Transactions Were Ex ecuted at a Fair and Reasonable Price 6. During the Relevant Time Period, Edward Jones charged unreasonable commissions to thousands of retail brokerage customers on certain equity transactions. 7. During a portion of the Relevant Time Pe riod, Edward Jones charged a minim um fixed commission of $50 on certain equity transactions (the "Minim um Equity Commission"). 8. The Act and Regulations prohibit Edwa rd Jones from charging unreasonable commissions for services performed. 9. FINRA Rule 2121 Supplementary Material .01 (Rule 2121.01) sets a guideline of five percent for determining whether a comm ission is unfair or unreasonable. However, the "5% Policy" is a guide, not a rule. A commi ssion pattern of five pe rcent or even less may be considered unfair or unreasonable. 10. During the Relevant Time Period, Edward J ones executed 6,603 equity transactions in Massachusetts which included an unreas onable commission for services performed (i.e., in excess of 5% of the princi pal trade amount), totaling $94,079. 11. Numerous equity transactions executed by Edward Jones included a commission well in excess of 5% of the prin cipal value of th e transaction. B. Edward Jones Did Not Reasonably Supervise Transactions Which Applied the Minimum Equity Commission 12. Edward Jones did not reasonably supervis e transactions that included the Minimum Equity Commission charge to ensure that Edwa rd Jones charged its cu stom ers a reasonable commission.

4 13. Edward Jones' policies and procedures cont emplated review of commissions as part of normal supervisory review processes. 14. Edward Jones' policies and procedures also contemplated a quarterly review of data related to small princip al transactions th at could result in excessive commissions. 15. Supervisors were permitted to make adju stments to ensure th at comm issions were reasonable. 16. Despite these systems, Edward Jones' surveillance policies failed to reasonably detect and correct unreasonabl e commission charges, spe cifically as it relates to the Minimum Equity Commission. 17. As a result, Edward Jones failed to ade quately supervise small principal equity transactions where the Minimum Equ ity Comm ission was in excess of 5%. VI. VIOLATIONS OF LAW Count I – Violation of M.G.L. c. 110A, § 204(a)(2)(J) 18. Section 204 of the Act provides: The secretary may by order impose an ad ministrative fine or censure or deny, suspend, or revoke any registra tion or take any other appr opriate action if he finds (1) that the order is in the public inte rest and (2) that the applicant or registrant … (J) has failed reasonably to supervise agen ts, investment adviser representatives or other employees to assure comp liance with th is chapter[.] Id. § 204(a)(2)(J). 19. Edward Jones' acts and practices, as desc ribed above, constitute a violation of Section 204(a)(2)(J) of the Act. VII. ORDER IT IS HEREBY ORDERED:

5 A. Edward Jones shall permanently cease and desist from conduct in v iolation of the Act and Regulations in the Commonwealth; B. Edward Jones is censured by the Division; C. Edward Jones shall provide restitution in an amount of no less than $114,782 providing the amount of the commission on certain small principal equity transactions that exceeded five percent 5% of the principal trade amount during the Relevant Time Period to the affected Ma ssachusetts customers set forth in Exhibit A, plus interest in the amount of 6% from the date of the transa ction to the date of the Offer. Edward Jones shall provide restitution as soon as practicable, but in no event longer than one hundred eighty (180) days of this Order; i. Restitution shall be in the form of a dollar cr edit to current customer accounts, or a check for a ll former custom ers or current customers who are entitled to restitution as a result of transactions involving an individual retirement account; ii. Edward Jones shall provide a notice of restitution to customers on term s not unacceptable to Massachusetts, Alabama, Iowa, Missouri, Montana, Texas, and Washington (the "Multi-State Gr oup") ("Notice Letter"). The Notice Letter shall be sent seven (7) days prio r to the distribution of any restitution. Within forty-five (45) days of the mailing of the Notice Letter, Edward Jones shall provide the Division with a list of all Massac husetts residents for whom Edward Jones receives a No tice Lette r as returned to sender ("Undeliverable Massachusetts Resident s"). To the extent the Division has access to different address informati on, Edward Jones shall m ail a second

6 Notice Letter to each Massachus etts resident within th irty (30) days of the Division providing such different address; and iii. Within forty-five (45) days of co mpletion of distribution of restitution, Edward Jones shall prep are and subm it to the Division a repo rt detailing the restitution paid pursuant to this Order, which shall include dates, amounts, and methods of the transfer of funds for all restitution paym ents. D. Edward Jones shall pay an administ rative fine in the amount of $100,000 and pay $25,000 in investigation costs for a total payment of $125,000 to Massachusetts within fifteen (15) days following the date of entry of this Order. Payment shall be: (l) made by United States postal money or der, certified check, bank cashier's check, bank money order, or wire; (2) ma de payable to the Commonwealth of Massachusetts; (3) either handdelivered; mailed to One Ashburton Place, Room 1701, Boston Massachusetts 02108; or wired pe r the Division instructions; and (4) submitted under cover letter or other doc um entation that identifies payment by Edward Jones and the docket number of the proceeding; E. An employee not unacceptable to the Mu lti-State Group shall certify in writing to the Division within sixty (60) days of th e date of entry of this Order that Edward Jones' policies and procedures have been changed and enhanced to ensure that all commissions are fair and reasonabl e. At a min imu m, Ed ward Jones shall certify that its policies and proc edures include the follo wing: i. Compliance systems to prevent the imposition of unreasonable or unfair commissions;

7 ii. Operational changes designed to ensure that, regardless of the principal amount of a transaction, commissions will not exceed 5%, in the absence of a documented exception; iii. Incorporation of all tran sactions, regardless of the principal amount of the transaction, into any system s used to identify and review potentially excessive commissions; and iv. Revisions to its policies and pro cedures sufficient to ensure the adequate implementation of the above. F. Edward Jones shall not claim, assert, or apply for a tax deduction or tax credit with regard to any state, federal, or local tax for any amounts that Edward Jones shall pay pursuant to this Order; G. Edward Jones shall not seek or accept, directly or indirectly, reimbursement or indemnification, including, but not lim ited to, any payments made pursuant to any insurance policy, with regard to any amount that Edward Jones shall pay pursuant to this Order; H. If Edward Jones is the subject of a voluntary or involuntar y bankruptcy petition under Title 11 of the United States Code within three hundred sixty-five (365) days of the entry of this Order, Edward Jones shall provide written notice to the Division within five (5) days of the date of the petition; I. Any fine, penalty, and/or money that Edward Jones shall pay in acco rdance with the Order is intended by Edward Jones and the Division to be a contemporaneous exchange for new value given to Edward Jones pursuant to 11

8 U.S.C. § 547(c)(1)(A) and is, in fact, a substantially contemporaneous exchange pursuant to 11 U.S.C. § 547(c)(1)(B); J. If Edward Jones fails to comply m ateria lly with any of the te rms set forth in this Order, the Division may institute an acti on to have this Order declared null and void. Additionally, after a fair hearing and the issuance of an order finding that Edward Jones has not complied with this Order, the Division may move to have this Order declared null and void, in whole or in part, and re-institute the associated proceeding that had been brought against Edward Jones; and K. For good cause shown, the Division may ex tend any of the procedural dates set forth above. Edward Jones shall make any requests for extensions of the procedural dates set forth a bove in writing to the Division. IX. NO DISQUALIFICATION This Order waives any disqualification in the laws of Massachusetts, or rules or regulations thereunder, including any disqua lification from relying upon the registration exemptions or safe harbor provisions to wh ich Edward Jones m ay be subject. This Order is not intended to be a fi nal order based upon violations of the Act that prohibit fraudulent, manipulative, or deceptive conduct. This Order is not intended to form the basis of any disqualifications under Section 3(a)(39) of th e Securities Exchange Act of 1934; or Rules 504(b)(3) and 506(d)(1) of Re gulation D, Rule 262(a) of Regulation A and Rule 503(a) of Regulation CF under the Securities Act of 1933. This Order is not intended to form the basis of disqualifi cation under the FINRA rules prohibiting continuance in membership absent th e filing of a MC-400A application or disqualification under SRO rules prohibiting co ntinuance in m embership. This Order is not intended to form a basis of a disq ualification under 204(a)(2) of the Uniform

continuance in membership absent the filing of a MC-400A application or disqualification under SRO rules prohibiting continuance in membership. This Order is not intended to form a basis of a disqualification under 204(a)(2) of the Uniform Securities Act of 1956 or Section 412(d) of the Uniform Securities Act of 2002. Except in an action by the Division to enforce the obligations of this Order, any acts performed or documents executed in furtherance of this Order: (a) may not be deemed or used as an admission of, or evidence of, the validity of any alleged wrongdoing, liability, or lack of any wrongdoing or liability; or (b) may not be deemed or used as an admission of; or evidence of, any such alleged fault or omission of Edward Jones in any civil, criminal, arbitration, or administrative proceeding in any court, administrative agency, or tribunal. WILLIAM FRANCIS GALVIN SECRETARY OF THE COMMONWEALTH Securities Division Office of the Secretary of the Commonwealth John W. McCormack Building, 17th Floor One Ashburton Place Boston, MA 02108 9 Dated::Cn1 J.f-) ~ 0 J. S