By Bloomberg News
Edward D. Jones & Company said yesterday that it had agreed to pay $75 million to settle regulators' accusations that it did not disclose hidden marketing deals with mutual funds.
The penalty is the largest imposed by regulators over so-called revenue-sharing agreements. The regulators involved include the Securities and Exchange Commission, NASD, the New York Stock Exchange and the United States attorney in St. Louis, where Jones is based, the company said in a statement.
The settlement still requires the approval of the S.E.C., the company said.
Jones marketed seven funds as preferred investments but never told investors that the fund companies paid to be included in the recommendation, regulators said. The firm, one of the largest closely held brokerage partnerships, neither admitted nor denied any wrongdoing.
In a statement, Edward Jones said it would take "immediate steps to revise customer communications and disclosures to ensure that the firm's preferred-vendor relationships are more fully disclosed."
After the agreement was reported on the Web site of The Wall Street Journal and on CNBC, the attorney general of California, Bill Lockyer, sued Jones over the payments. He said at a news conference in Los Angeles that the $75 million settlement was too small and that he would not join in it.
The S.E.C. has brought two previous cases involving incentive payments, which, while not necessarily illegal, must be disclosed to investors.
Last year, the S.E.C. fined Morgan Stanley $50 million, contending that it failed to tell investors that it promoted the funds of 16 companies in exchange for undisclosed fees. In March, MFS Investment Management, a Boston unit of Sun Life Financial, also paid $50 million to settle accusations that it used brokerage commissions to pay for the promotion of some of its funds. Neither company admitted or denied wrongdoing.
http://www.nytimes.com/2004/12/21/business/21fund.html
This, I am sorry to say, is bad. This very good company does many good things. I understand the belief that it was completely wrong that they were receiving a portion of the profits gained from said mutual funds. I cannot believe the way this is being brought against them. I saw other articles flat out saying that they do not have any research or if they do, they just are not following it. These claims are completely unbiased. From my information coming from a much better source the way the pay worked was that the company might receive 1% of the growth that you were receiving. For example if you were seeing a growth of 14% you were receiving 13%, there was no gain for them to get people to invest in losing stocks.
the worst outcome of this is the class action lawsuits that coming out of this I know of four which were today filed in southern Illinois courts so there is a possibility of Edward Jones no longer existing. 29,000 jobs down the shitter if things take a bad swing anybody think that will be good for the economy and growth.