Nevada will receive part of a $17 million, multi-state settlement with Edward D. Jones & Co., L.P., following a probe into failures of the broker-dealer's supervision of customers, the secretary of state's office securities division announced Friday.
The four-year investigation looked into how the firm's failure to supervise financial professionals moved customers' commission-based brokerage accounts to fee-based investment advisory accounts. State investigators say the firm overcharged by failing to offset advisory fees for accounts that transitioned from the commission-based accounts.
Nevada will receive about $320,000 as part of the settlement, a press release said. The state will also receive an additional $15,000 for Nevada's role as lead investigators on the case.
"The Secretary of State's Office Securities Division is dedicated to protecting the best interests of Nevada's investors and investors across the country," Secretary of State Cisco Aguilar said in a statement. "I'm proud of the investigators in our office for their leadership in ensuring companies conducting business in our state are providing transparent services to their customers."
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 the administrative fine of about $320,000, according to the release. The fines were set based, in part, on the positive performance of the investment advisory accounts as compared to the brokerage accounts.
Nevada's fine will go to the state's general fund, according to state law. SB 76, a legislative priority of the secretary of state's office in the upcoming session, would create a victim's compensation fund for victims of securities fraud.
The probe 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. It followed the 2016 U.S. Department of Labor fiduciary rule that made investment advice to retirement accounts subject to a fiduciary standard of care, according to the release.
"In partnership with the North American Securities Administrators Association (NASAA) and other state securities regulators, we will continue to protect investors and ensure that companies operating in Nevada follow our securities laws," Nevada Securities Administrator Erin Houston said in a statement. "The Nevada Securities Division 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."