Edward Jones Faces $17M Multi-State Enforcement Settlement

enforcement-actions

Filed January 13th, 2025

Detected March 17th, 2026

Summary

The North Dakota Securities Department joined a $17 million multi-state settlement with Edward Jones over supervisory failures related to front-load commissions on Class A mutual fund shares. Edward Jones will pay approximately $320,000 to each participating state and Washington D.C., the U.S. Virgin Islands, and Puerto Rico.

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What changed

The North Dakota Securities Department, as part of a 14-state working group led by NASAA, has entered into a $17 million settlement with Edward D. Jones & Co., L.P. The enforcement action stems from an investigation into the firm's supervision of customers paying front-load commissions for Class A mutual fund shares, particularly when customers moved from brokerage to advisory accounts. The investigation found gaps in Edward Jones' supervisory procedures concerning these transactions.

As part of the settlement, Edward Jones will pay an administrative fine of approximately $320,000 to each of the 50 states, Washington D.C., the U.S. Virgin Islands, and Puerto Rico. Firms offering both brokerage and investment advisory services should review their supervisory procedures to ensure customers receive services at an appropriate price and that sales practices align with client needs, especially concerning the timing of mutual fund share sales relative to account types and anticipated holding periods.

What to do next

Review supervisory procedures for sales of Class A mutual fund shares, particularly concerning front-load commissions and transitions between brokerage and advisory accounts.
Ensure pricing of services is appropriate and aligned with customer needs and expectations.
Consult with legal counsel regarding any potential impact on existing client agreements or past transactions.

Penalties

Edward Jones will pay approximately $320,000 to each of the 50 states, Washington D.C., the U.S. Virgin Islands, and Puerto Rico as part of the $17 million total settlement.

Source document (simplified)

North Dakota Joins $17 Million Multi-State Enforcement Settlement with Edward Jones

<< All News Monday, January 13, 2025 **Categories:* Enforcement Actions* NEWS RELEASE | **** FOR IMMEDIATE RELEASE | **** January 13, 2025

North Dakota Joins $17 Million Multi-State Enforcement Settlement with Edward Jones

Bismarck ND – The North Dakota Securities Department, a member of the North American Securities Administrators Association (NASAA), has joined a $17 million settlement with Edward D. Jones & Co., L.P. (Edward Jones) resulting from an investigation into the broker-dealer’s supervision of customers paying front-load commissions for Class A mutual fund shares.

The four-year investigation was led by a working group of 14 state securities regulators and looked into Edward Jones’ supervision of customers moving from brokerage to advisory accounts in light of the 2016 U.S. Department of Labor (DOL) Fiduciary Rule that would make investment advice to retirement accounts subject to a fiduciary standard of care.

The investigation found that Edward Jones charged front-load commissions for investments in Class A mutual fund shares in situations where the customer sold or moved the mutual fund shares sooner than originally anticipated. The states found gaps in Edward Jones’ supervisory procedures in this respect.

As part of the settlement, Edward Jones will pay each of the 50 states, Washington, D.C., the U.S. Virgin Islands, and Puerto Rico an administrative fine of approximately $320,000. In evaluating the supervisory failures and determining the appropriate resolution, the states considered certain facts such as the positive performance of the investment advisory accounts as compared to the brokerage accounts.

“In partnership with NASAA and other state securities regulators, we will continue to protect Main Street investors and ensure that companies operating in North Dakota follow our securities laws,” said Securities Commissioner Tim Karsky. “North Dakota Securities Department appreciates the ongoing cooperation of Edward Jones throughout this investigation and settlement process. Firms that offer both brokerage and investment advisory services should be mindful that customers are receiving the services the customer wants at an appropriate price.”

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