FOR IMMEDIATE RELEASE
Monday, August 08, 2005
Contact: Stacie Temple, (573) 526-5076
Contact: Mike Seitz, (573) 526-0949
Carnahan Announces $1.5 Million Settlement With Edward D. Jones & Co., L.P.
Jefferson City, Missouri -- The Missouri Commissioner of Securities, David B. Cosgrove, approved a consent order Friday with Edward D. Jones & Co., L.P., resolving allegations that the firm failed to disclose information about its revenue sharing arrangements with mutual fund companies to Missouri investors.
Under the terms of the agreement, Edward D. Jones will pay $1.5 million in fines and payments. During its investigation, the Missouri Securities Division in the Office of the Secretary of State found that Edward D. Jones had revenue sharing arrangements with seven mutual fund families, which the company and its investment representatives failed to adequately disclose to Missouri investors.
Revenue sharing is an arrangement in which mutual fund companies agree to pay additional compensation to brokerage firms for recommending their funds. Carnahan said the practices of Edward D. Jones were in violation of Missouri securities laws because the brokerage firm failed to tell investors of the incentives it received from the preferred funds.
"Missouri investors deserve to get investment advice based on what is best for them, not what is financially beneficial to their brokers. I'm pleased that Edward Jones is working to ensure that will happen in the future," said Carnahan.
Late last year, Edward D. Jones settled a similar enforcement action with the Securities and Exchange Commission, the NASD and the New York Stock Exchange, in which the company paid $75 million for distribution to harmed investors for failing to disclose revenue sharing agreements.
Under the Missouri agreement, Edward D. Jones will also disclose on its web site information regarding the revenue sharing payments that they receive and will include the Missouri Secretary of State's office in reviewing and making recommendations about the adequacy of Edward Jones' disclosures.
"The Securities Division continues to watch for situations where investors may not have been provided all the information necessary to make informed investment decisions," said Cosgrove.
For more information regarding investments and fraud protection, or for information regarding a company or representative, visit the Secretary of State's web site at http://www.sos.mo.gov/securities/ or call the toll-free investor hotline at 1-800-721-7996.
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