RELEASE: Department of Commerce and Consumer Affairs Joins $17 Million Multistate Enforcement Settlement with Edward Jones

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STATE OF HAWAIʻI

KA MOKU ʻĀINA O HAWAIʻI

DEPARTMENT OF COMMERCE AND CONSUMER AFFAIRS

KA ʻOIHANA PILI KĀLEPA

BUSINESS REGISTRATION DIVISION

JOSH GREEN, M.D.

GOVERNOR

KE KIAʻĀINA

NADINE Y. ANDO

DIRECTOR

KA LUNA HOʻOKELE

TY Y. NOHARA

COMMISSIONER OF SECURITIES

Department of Commerce and Consumer Affairs Joins $17 Million Multistate Enforcement Settlement with Edward Jones

FOR IMMEDIATE RELEASE
January 14, 2024

HONOLULU - The Department of Commerce and Consumer Affairs (DCCA), through its Securities Enforcement Branch, has joined a $17 million settlement between members of the North American Securities Administrators Association (NASAA) and Edward D. Jones & Co., L.P. (Edward Jones). The settlement is the result of an 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 was led by a working group of 14 state securities regulators and investigated 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 that would give investment advice to retirement accounts subject to a fiduciary standard of care.

The investigation found that Edward Jones charged front-load commissions for investments in Class A mutual fund shares in situations where the customer sold or moved the mutual fund shares sooner than originally anticipated. The states found gaps in Edward Jones's supervisory procedures in this respect.

As part of the settlement, Edward Jones will pay each of the 50 states, Washington D.C., the U.S. Virgin Islands, and Puerto Rico an administrative fine of approximately $320,000. In evaluating the supervisory failures and determining the appropriate resolution, the states considered certain facts such as the positive performance of the investment advisory accounts as compared to the 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 Hawai'i follow our securities laws," said Commissioner of Securities Ty Y. Nohara. "The DCCA's Securities Enforcement Branch appreciates the ongoing cooperation of Edward Jones throughout this investigation and settlement process. Firms that offer both brokerage and investment advisory services should be mindful that customers are receiving the services the customer wants at an appropriate price."

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Media Contact:
Communications Office
Department of Commerce and Consumer Affairs
Phone: 808-586-2760
Email: [email protected]

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