Edward Jones is now sending checks and making electronic payments to its current and former customers as part of its settlement of revenue sharing claims. The Securities and Exchange Commission announced the distribution of $79 million from the “Fair Fund” (also known as the “Edward Jones & Co., L.P. Qualified Settlement Fund”) as compensation to victims of Edward Jones’ practices according to the settlement reached. These payments do not compensate Jones’ clients for any losses caused by any other unfair sales practices.
According to the SEC, Edward Jones failed to adequately disclose kickbacks the firm received from various mutual fund companies, known as the “Preferred Fund Families.” The Preferred Families mutual funds are American Funds; Federated Investors; Goldman Sachs Group; Hartford Mutual Funds; Lord Abbott Funds; Putnam Investments; and Van Kampen Investments. The SEC’s order is available on the SEC website.
Edward Jones’ kickback scheme impacted approximately 2.1 million of its customers who purchased shares of the Preferred Fund Families between January 1, 1999 and December 31, 2004. The firm told the public and its customers it was promoting the sale of the Preferred Families’ mutual funds because of the funds’ long-term investment objectives and performance. However, Edward Jones failed to disclose that it received tens of millions of dollars of undisclosed revenue sharing payments from the Preferred Families each year for selling their mutual funds.
Customers receiving settlement checks and direct deposits are also receiving a letter advising the recipient to consult a tax advisor before cashing or depositing the check. Some customers may receive a Form 1099 as a result of negotiating the check since the payment may be construed as a taxable distribution. Those receiving checks only have a limited time to cash or deposit the check before it becomes void.
The payments being made by Edward Jones to its clients and former clients are not reimbursing them for losses which may have been by caused by other wrongdoing such as unsuitable investments, misrepresentations or other improper sales practices. Investors who have lost a significant portion of their account at any brokerage firm should seek legal advice to learn if they may be able to recover all or part of such losses.
SSEK is a law firm that has represented thousands of investors nationwide to recover losses caused by misconduct of investment firms and their brokers. We offer free consultations and can be reached toll-free at (800) 259-9010 or via email at firm@sselaw.com.