Jones Financial May Face SEC Fine
Market regulators may fine Edward D. Jones, one of America’s largest mutual fund distributors, for not telling clients that it was collecting fees for recommending some funds more than others, the brokerage’s parent company said Tuesday.
In a regulatory filing, Jones Financial Cos. said the Securities and Exchange Commission was “considering recommending enforcement action” against the company for its mutual fund sales practices. The National Assn. of Securities Dealers staff also is recommending an enforcement action, the filing said.
St. Louis-based Edward D. Jones is the latest in a string of high-profile brokerage firms to be investigated for selling certain funds very aggressively. So-called revenue-sharing agreements are not illegal, but regulators insist that clients must be told about them.
“Many financial services firms are currently being questioned by various regulators and governmental authorities about mutual fund practices,” the company wrote in a statement, adding that it was cooperating with regulators.
According to the filing, Edward D. Jones received $89.9 million in revenue-sharing payments last year and $85.9 million in 2002.
The regulatory probe into revenue-sharing agreements is part of a broader investigation launched last fall into how the $7.6-trillion mutual fund industry operates.