Four years on, Edward Jones pays up in mutual fund case
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From Times staff writer Marc Lifsher:
What’s that line about the wheels of justice grinding slowly?
California Atty. Gen. Jerry Brown on Wednesday announced that brokerage Edward Jones & Co. will pay the state $7.5 million to settle a 4-year-old case involving the firm’s ‘revenue sharing’ agreements with mutual fund companies.
Then-attorney-general Bill Lockyer sued Jones in 2004, alleging that it had failed to tell its customers about fee-splitting arrangements it had with various fund companies. Investors, Lockyer said, didn’t know about the incentive Jones brokers had to pitch some funds and not others.
There was a wave of federal and state cases brought against brokerages and fund firms on this issue beginning in 2003. Most of them were resolved years ago in deals that required the companies to clearly inform investors about revenue-sharing agreements. See Jones’ disclosure page here.
St. Louis-based Jones already has settled with the Securities and Exchange Commission, the New York Stock Exchange, the National Assn. of Securities Dealers and the U.S. attorney for the Eastern District of Missouri.
Brown spokeswoman Christine Gasparac blamed the delay in the state’s case on legal battles in the federal courts that were resolved in California’s favor only a year ago. Jones had claimed that federal securities laws preempted the state from seeking damages under its own statutes. The brokerage lost that argument.
Jones, in a statement, said it was ‘pleased that we were able to negotiate a settlement with the California attorney general and put the issue of revenue sharing disclosure behind us,’ according to Reuters.
Brown’s office will take $2.7 million of the settlement for fees and expenses; the other $4.8 million will go into California’s general fund.
Peanuts, yes -- but given the state’s budget situation, every peanut counts.