EDJ fined again $900k Muni Bonds

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uwec1986's picture
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 http://www.finra.org/Newsroom/NewsReleases/2009/P118457
 

 

 

For Release:Contact:
Thursday, April 9, 2009Herb Perone (202) 728-8464
 
 
FINRA Fines Edward Jones $900,000 for Failing to Timely Deliver Official Statements to Customers in Municipal Bond Sales

Washington, D.C. — The Financial Industry Regulatory Authority (FINRA) announced today that it has fined Edward D. Jones & Co., L.P. of St. Louis $900,000 for its failure to timely deliver official statements to customers who purchased new-issue municipal securities and related supervisory and recordkeeping failures.
 
With limited exceptions, broker-dealers selling a new-issue municipal securities are required under the rules of the Municipal Securities Rulemaking Board (MSRB) — which are enforced by FINRA — to deliver a copy of the official statement to the customer on or before settlement date. New-issue securities are those sold during the initial distribution of bonds to the public.
 
"Official statements contain important financial information for investors about the issuing municipality and the bonds they are purchasing," said Susan L. Merrill, FINRA Executive Vice President and Chief of Enforcement. "This firm was consistently late in delivering those statements even though it was repeatedly on notice about its delivery failures."
 
FINRA found that Edward Jones's late deliveries occurred when the firm was conducting retail transactions but was not a member of the underwriting syndicate for a new issue.
 
FINRA further found that the firm's failures from 2002 through 2006 were systemic. During that time period, Edward Jones engaged in approximately 100,000 new-issue municipal bond transactions in which it was not an underwriter. For a significant number of those transactions, the firm was late in delivering official statements to its customers. The firm's systemic late deliveries had multiple causes, including lack of training for employees, incorrect instructions to employees, limited photocopying capacity and errors by employees of the firm, including trading supervisors.
 
The late deliveries continued. In September 2008 alone, the firm was late in mailing official statements to customers in over 6,200 transactions, which represented 19 percent of the firm's municipal bond transactions covered by the applicable MSRB rule.
 
FINRA further found that Edward Jones's own internal communications repeatedly referenced that it was not timely delivering official statements. Nevertheless, the firm failed to take reasonable and sufficient steps to comply with its delivery obligations.
 
FINRA also found that Edward Jones failed to keep required records, did not have written supervisory procedures addressing the requirements for delivery of official statements until May 2006, and that those procedures contained incorrect guidance. As part of the settlement, an officer of Edward Jones will certify that it has adopted and implemented systems and procedures reasonably designed to ensure compliance with MSRB rules, including systems and procedures to provide adequate oversight if third party vendors are utilized.
 
In settling this matter, Edward Jones neither admitted nor denied the charges, but consented to the entry of FINRA's findings.
 
Investors can obtain more information about, and the disciplinary record of, any FINRA-registered broker or brokerage firm by using FINRA's BrokerCheck. FINRA makes BrokerCheck available at no charge. In 2008, members of the public used this service to conduct 11.6 million reviews of broker or firm records. Investors can access BrokerCheck at www.finra.org/brokercheck or by calling (800) 289-9999.
 
FINRA, the Financial Industry Regulatory Authority, is the largest independent regulator for all securities firms doing business in the United States. FINRA is dedicated to investor protection and market integrity through comprehensive regulation. FINRA touches virtually every aspect of the securities business - from registering and educating all industry participants to examining securities firms; writing and enforcing rules and the federal securities laws; informing and educating the investing public; providing trade reporting and other industry utilities; and administering the largest dispute resolution forum for investors and firms.
 
For more information, please visit our Web site at www.finra.org.

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Incredible Hulk's picture
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Joined: 2006-03-24

Congratulations? I can count on one hand the number of clients that get past the cover page of the official statement/prospectus, and only one that reads it. This is just another example of attorneys creating laws that are sold as serving the public, that do nothing but create more paperwork for us and more billable hours for them. Not to mention an excuse to extort $900k.

uwec1986's picture
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Joined: 2006-04-05

True...but...I thought Jones ran the cleanest ship and the rest of us are scum (EDJ fined $202 mil. for revenue sharing...thanks to me...lol).  The hypocrisy continues!

uwec1986's picture
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And this is why we left EJ...hypocrisy!

Incredible Hulk's picture
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Do you realize how petty you are? I assume you realize that no one at EDJ thinks twice about you, yet you waste so much of your life with this meaningless banter? Dude, I think you may want to visit a psychiatrist to work on some issues.

uwec1986's picture
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Joined: 2006-04-05

I see you're still drinking the Kool Aid...good luck with that.

B24's picture
B24
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Joined: 2008-07-08

UWEC, you are taking a purely systemic back-office failure and making it seem as if we are a bunch of liars and cheats.  Seriously, we all know the importance of compliance, but how many of us really think about prospectuses and all that crap on a daily basis.  Bottom-line, there was nothing for Jones to gain by not mailing prospectuses in a timely manner.  They had incorrect procedures in place for mailing something nobody looks at.  $900K - couldn't have been that big a deal.

uwec1986's picture
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My comments about hypocrisy are directed at HQ and not the IR (I mean FA).  I will say that most of you FA's are still drinking too much Kool Aid...Jim Jones style.

Spaceman Spiff's picture
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Joined: 2006-08-08

Funny thing about that fine.  Jones reported on themselves back in 2006 that we had some processing errors and some delays that caused us not to meet the deadlines.  FINRA in their infinite wisdom decides that since we told on ourselves they'd be nice and only find us $900K.  So, it wasn't some loser whistle blower who figured out that the firm might be doing something wrong.  Oh yeah...I see you landed a new job recently:
 

For Release:Contacts:
Thursday, March 5, 2009Nancy Condon (202) 728-8379Herb Perone (202) 728-8464
 
 
FINRA Announces Creation of "Office of the Whistleblower" 
 
 
Full link here:  http://www.finra.org/Newsroom/NewsReleases/2009/P118095
 
 
The sad thing is that you believe that you're whistle blowing was the greatest thing in the world.  It didn't even make it to this press release as the reason there needed to be a whistle blower department.  That must be sooo incredibly disappointing. 
 
I took a minute to figure out how much FINRA has handed out in fines this year, 08, and in 07.  Total was about $86 million.  Of that $900K belonged to EDJ.  I only looked at the news releases that had dollar amounts posted in the headline, so the dollar amounts may be more than that total and for EDJ.  So only about 1% of the fines went to Jones, one of the biggest players in the game.  You'd think that if all of us kool aid drinkers and HQ associates were such horrible people and we were trying to screw our clients every chance we got, that percentage would be a lot higher.  You are obviously not working hard enough at your new job.  You'd better get back to work before your boss knows you're playing on the internet.  

wired's picture
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Joined: 2007-09-16

Wow, I can't believe this but I have to agree with Spacey. This is really a non-event. Don't get me wrong, I have a tuff time resisting a good Jones bash from time to time, but really there has to much more substantive criticism to tee off on EJ about than this.   

Spaceman Spiff's picture
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Uwec reminds me of that guy we all know who was REALLY cool in his bright red Camaro with his Tom Cruise sunglasses and his Michael Jackson zippered leather jacket (red to match his car) back in high school. 
He's still driving that car, still thinks he's cool, still wears that jacket, and has now lost all of his hair on top so he grew a mullet in the back to compensate. 

Spaceman Spiff's picture
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What a great way to end the evening. 

uwec1986's picture
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Dude...Chicks dig the jacket and the glove....now where did I put those sunglasses?

Moraen's picture
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Joined: 2009-01-22

This really doesn't seem like a big deal. Had it been 900 million for excessive trading... then it would be a big deal.

uwec1986's picture
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Joined: 2006-04-05

It's a big deal if it's $1 because Jones $ucks...lol

Spaceman Spiff's picture
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Joined: 2006-08-08

It really is a good thing most investors don't know about the FINRA website.  There is some really scary stuff happening out there.  Start poking around on that site and you'd think you can't trust any company out there. 

Moraen's picture
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Joined: 2009-01-22

Great part about having a third-party advisory service - no company to screw things up for you- if they do - you fire them.

IndyEDJ's picture
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Joined: 2006-12-13

wired wrote:Wow, I can't believe this but I have to agree with Spacey. This is really a non-event. Don't get me wrong, I have a tuff time resisting a good Jones bash from time to time, but really there has to much more substantive criticism to tee off on EJ about than this.   
 
I agree with Spacey.  This is a non event and we should not keep beating a dead horse.
 
IndyEDJ

success's picture
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Joined: 2005-02-01

If Edward Jones getting fined $900k is the worst news during this financial mess, that is amazing.  Can you imagine being with WB, C, BAC, Merrill, or any other bank right now.?

Spaceman Spiff's picture
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Joined: 2006-08-08

It's not the worst news.  That link uwec posted to the FINRA press release site is interesting.  You see quickly that $900k isn't a big deal as far as FINRA is concerned and not getting a prospectus to a bond buyer in a timely fashion isn't even close to the worst of the offenses.  Read the one about Morgan paying $7 Million.  Those are the kind of guys that give the industry a bad reputation.  Not getting someone a document they really don't want and will never read isn't even close.   

success's picture
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Joined: 2005-02-01

I agree 100%.  People bash Jones for everything and think they are perfect. Of course no firm is perfect, not even close.  However, in this environment of failing financial institutions and bailouts, failing to deliver a prospectus on time is hardly relevant.

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