January 17, 2025
The Utah Department of Commerce’s Division of Securities, Multi-State Working Group Finds Supervisory Failures With Respect to Class A Mutual Fund Shares
SALT LAKE CITY, UT – (January 16, 2025) – The Utah Department of Commerce’s Division of Securities, 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). This settlement follows the investigation into the broker-dealer’s supervision of customers paying front-load commissions for Class A mutual fund shares in light of later moving brokerage assets into fee-based investment advisory accounts.
The four-year investigation, led by a working group of 13 state securities regulators in addition to Utah, looked into Edward Jones’s supervision of customers moving from brokerage to advisory accounts in light of the 2016 U.S. Department of Labor (DOL) Fiduciary Rule, which would make investment advice to retirement accounts subject to a fiduciary standard of care.
The investigation revealed that Edward Jones charged front-load commissions for investments in Class A mutual fund shares when customers sold or transferred the shares sooner than originally planned. The states found gaps in Edward Jones’s supervisory procedures in this respect.
“This settlement reflects our commitment to protecting investors in Utah,” said Margaret Woolley Busse, Executive Director for the Utah Department of Commerce. “We will continue to work with our regulatory partners to ensure that Utah’s securities markets operate fairly and transparently.”
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. The states considered facts such as the positive performance of the investment advisory accounts as compared to the brokerage accounts to determine the appropriate resolution in this case.
“The Utah Division of Securities appreciates the collaboration with NASAA and other state securities regulators to find this resolution,” said Jason Sterzer, Director of the Utah Division of Securities. “We are dedicated to protecting investors and ensuring compliance with Utah’s securities laws.”