Edward Jones Multistate Settlement for Supervisory Failures

press-office

Filed January 24th, 2025

Detected March 17th, 2026

Summary

The New Mexico Securities Division joined a $17 million multistate settlement with Edward Jones over supervisory failures related to charging front-load commissions on Class A mutual fund shares and subsequent movement to fee-based advisory accounts. Edward Jones will pay approximately $320,000 to each of the 50 states, D.C., and territories.

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What changed

The New Mexico Securities Division, as part of a 14-state working group coordinated by NASAA, has entered into a $17 million multistate settlement with broker-dealer Edward Jones. The settlement addresses supervisory failures identified during a four-year investigation into the firm's practices concerning customers paying front-load commissions for Class A mutual fund shares, particularly when those shares were later moved into fee-based investment advisory accounts. The investigation also considered the firm's supervision in light of the 2016 Department of Labor Fiduciary Rule.

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 advisory services should review their supervisory procedures to ensure customers receive services at appropriate prices and that sales practices align with client needs and regulatory expectations. While the settlement addresses past conduct, ongoing vigilance regarding fee structures and client suitability is crucial to avoid similar supervisory lapses and potential penalties.

What to do next

Review supervisory procedures for charging front-load commissions on mutual fund shares, especially when clients transition to fee-based advisory accounts.
Ensure pricing of services is appropriate and aligned with client needs and expectations.
Verify compliance with fiduciary standards and relevant regulations, including the DOL Fiduciary Rule where applicable.

Penalties

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.

Source document (simplified)

Securities Division joins $17 million multistate settlement with Edward Jones

Working group finds supervisory failures with Class A mutual fund shares

SANTA FE – The New Mexico Securities Division, 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) after an investigation into the broker-dealer’s supervision of customers paying front-load commissions for Class A mutual fund shares then later moving brokerage assets into fee-based investment advisory accounts.

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

“In partnership with NASAA and other state securities regulators, we will continue to protect investors and ensure that companies operating in New Mexico follow our securities laws,” said New Mexico Securities Division Acting Director Benjamin Schrope. “We appreciate 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.

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’s 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.

The settlement is posted on the New Mexico Securities Division’s website here. New Mexico residents who have questions about this settlement should contact the Securities Division at 505-476-4580 or online at www.rld.nm.gov/securities-division.