A sad Day for Business
 

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.

If a company breaks the law they should be punished to the full extent to which they broke the law.

When I took my stockbroker test I had to study and know the laws of the trade inside and out. You know going in, that the industry is highly regulated and highly watched because you deal with other people's money and in some cases life savings.

Edward D. had a pretty good rep. but they fucked up, broke the laws (they knew existed) and therefore I feel no pity towards them being fined and held accountable. EDJ was at one time, one of the more ethical companies, and very hard to get a job into. Just shows how bad the competition has gotten in the industry.

Is what they did common? Pretty much so just held quietly. I had companies that I researched, followed and would recommend and then I'd get an ass chewing because, yes my client made money but the brokership I worked for wasn't making anything but commission. Most of the companies I recommended the brokership didn't have shares of in their coffers, and didn't reasearch. They wanted me to push companies that they owned shares in (which is borderline legal.... especially if you do not foreclose information that your brokership owns shares). But this is very common throughout the industry. EDJ just got caught.

They failed to see the fact that by my recommendations clients made money, felt good and recommended us to their friends and would buy more from us. I inherited 25 some active, some non-active clients. I finished a year and a half later with 150 ACTIVE clients.

I left because of burnout and I was in a gambling phase where my debts were catching up to me.

I don't think they are so innocent in this matter. If they felt that they were doing nothing wrong then why did they not disclose this arrangement to the fund buyers? Probably because they know that a lot of people wouldn't buy them if they knew that a portion of their gains were being kept by Edward D. Jones.

After seeing a great deal of my money depart over the last few years, I no longer take the advice of "financial experts" unless I'm paying them only an hourly fee. No commissions.

Lack of regulation, or enforcement of Laws meant to regulate, leads to an inevitable corruption of most entities. Anyone remember Enron.

I fail to see why you're so indignant, Fuzy. As far as I can see this is a fairly straightforward case of a company doing something that they knew was wrong, getting caught and having to pay the penalty. Too many relatively poor, working class people know that they need to invest to get ahead and are then swindled by these enormous investment corporations because they are not a large customer.

its not that they shouldn't be fined i didn't want to say that its just that what happens after the fact, it destroys. at this moment there are 4 class action lawsuits against the company filed in madison county. for all of you that don't know it is basicly the most corupt legal system in the country. all the judges are former trial atternys who always lead the case in the direction tword there buddies. my ideal situation would be that lawsuits can not be brought against the corporation now that it has paid its fine anyone who wants to try and take money will take it out of the money that they were fined.

also this didn't do anything what was being done will just be added to the paperwork and they will continue to make money of off what you are making, things never really change.

Or Loral, John Huang, and Johnny Chung?