NASHVILLE, TN – The Tennessee Department of Commerce & Insurance (TDCI), 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) stemming from an investigation into the broker-dealer’s supervision of customers who paid front-load commissions for Class A mutual fund shares, particularly in cases where brokerage assets were later moved into fee-based investment advisory accounts.

The four-year investigation was conducted by a working group of 14 state securities regulators focusing on Edward Jones’s practices regarding the transition of customers from brokerage to advisory accounts, especially in light of the 2016 U.S. Department of Labor (DOL) Fiduciary Rule, which established a fiduciary standard for investment advice concerning retirement accounts.

The investigation revealed that Edward Jones imposed front-load commissions on investments in Class A mutual fund shares when customers sold or transferred these shares sooner than anticipated. The states identified weaknesses in Edward Jones’s supervisory procedures related to 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. In determining the supervisory shortcomings and the resolution, the states considered factors such as the comparative performance of investment advisory accounts versus 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 Tennessee adhere to our securities laws,” stated TDCI Assistant Commissioner for Securities Elizabeth Bowling. “TDCI’s Securities Division appreciates Edward Jones's ongoing cooperation throughout this investigation and settlement process. Firms that offer both brokerage and investment advisory services must ensure that customers receive the desired services at the appropriate price."

Investors with questions are encouraged to contact TDCI’s Securities Division online at tn.gov/securities or call 800-863-9117 for further information.

Source: Tennessee Department of Commerce & Insurance

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