Jones Pays

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hoosier's picture
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Read the news 75 mil

eddjones654's picture
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WHERE?????
TO WHOM????FOR WHAT ???? 

hoosier's picture
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Reuters

eddjones654's picture
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Please post the link
     

xej1984's picture
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All I could find was a blurb on the WSJ site.
http://online.wsj.com/public/ushttp://
I guess there will be a run on tomorrow's WSJ .... and who said there wasn't a Santa Claus???
      

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U.S. BUSINESS NEWS

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Edward Jones to Pay $75 MillionTo Settle Fund-Steering Charges
By DEBORAH SOLOMON Staff Reporter of THE WALL STREET JOURNALDecember 20, 2004 12:42 p.m.
Edward D. Jones & Co. has agreed to pay $75 million to settle charges with federal securities regulators that it steered investors to certain mutual funds without disclosing that the firm received compensation from those funds, according to people familiar with the matter.
The Securities and Exchange Commission, the National Association of Securities Dealers and the New York Stock Exchange have tentatively agreed to the settlement, these people said. A final agreement could be approved by the SEC as early as this week.

Marshall's picture
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zacko's picture
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State of California also is filing suit...which will be huge.

That's a big fine for a firm like Jones.  Lets see where the money comes from.   

uwec86's picture
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Edward Jones to Pay $75 MillionTo Settle Fund-Steering Charges
By DEBORAH SOLOMON Staff Reporter of THE WALL STREET JOURNALDecember 20, 2004 12:42 p.m.
Edward D. Jones & Co. has agreed to pay $75 million to settle charges with federal securities regulators that it steered investors to certain mutual funds without disclosing that the firm received compensation from those funds, according to people familiar with the matter.
The Securities and Exchange Commission, the National Association of Securities Dealers and the New York Stock Exchange have tentatively agreed to the settlement, these people said. A final agreement could be approved by the SEC as early as this week.
Regulators are expected to accuse St. Louis-based Edward Jones of marketing seven funds to investors as the "best" without disclosing that the funds had paid to be included on that list of fund families. An Edward Jones spokesman didn't immediately return calls seeking comment.
The case is part of the SEC's broad probe into conflicts of interest at mutual funds and brokerage firms. Regulators have been looking into how brokers are compensated for selling funds, including whether customers are aware of any financial relationships between the broker and the mutual funds they sell.
This will be the second case the SEC has brought against a brokerage firm related to so-called "revenue sharing." Last year, the SEC brought civil charges against Morgan Stanley and fined it $50 million for conflicts of interests, including directing investors to certain funds based on commissions the firm received. While revenue sharing isn't illegal, brokers are required to steer investors to products that are best for them and can't take compensation into consideration when deciding where a client should put his or her money. Any financial relationships must also be disclosed.
The SEC has settled similar charges with some fund companies and is expected to bring additional cases next year against both fund firms and brokerage houses.
Write to Deborah Solomon at deborah.solomon@wsj.com

Malcolm's picture
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I cant wait to see where that money is going to come from!  I agree that is a heck of a lot of money for a firm like EDJ.  Merry Christmas Edward Jones.  I hope 2005 is even worse for you!  Bring on California! 
 

stanwbrown's picture
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I think the question might end of being, who will be buying Jones. I find it hard to believe that they don't need help from a white knight with this sort of thing.

Marshall's picture
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Can somebody tell us what the company line is today around Jones?  Hawkeye, what says Doug Hill today? 
Perhaps it's "Don't worry.  We chose to pay this money out of the goodness of our hearts, not because of any 'legal' requirement.  The greatest sales force in the world will pay it off with ease"
 
 

Malcolm's picture
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A friend of mine there tells me they are given very little information on what is going on.  They are basically in the dark other than the GPs.      

BTExpress82's picture
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Couldn't happen to a nicer group of con-artists. 

Dewey Cheatham's picture
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This truly is an all Jones board.  Amazing that such an insignificant topic gets so many hits and replies. 
All you ex-Jones reps must find something else to talk about.  It is like getting a divorce and spending the rest of your life talking about your ex-...
Get over it and move on.

Marshall's picture
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Dewey-
Thanks for the hit and reply.

zacko's picture
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Jones agreed to the fines and chose not to even argue them?  Maybe they feel they got off too easy?
I'm sure as hell glad I am no longer a holder of that ridiculous LP. 
 
 
 

frankstrom's picture
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Joined: 2004-11-30

Just read the un-printable Doug Hill letter at a Jones office.  Not over the top but he does say that GP and LP payouts will be down until reserves are built back up. 
But why is this such a low number?  I remember doing the numbers in my head this year when the others settled and figured Jones was looking at $200-250 million.  This is a slap on the wrist.
While I thought the whole thing was cr^p from the beginning, Jones skated on this compared to the other settlements.

Bearcat's picture
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Dear Sirs/Ma'ams
I hereby retract the item I posted previously about having regrets for leaving Jones.
 
Sincerely,
Bearcat

frankstrom's picture
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Just finished reading the California lawsuit against Jones.  The AG must have some kind of pissing contest with the NYAG.  He makes a lot of misleading statements.  He throws around the $300 million figure when the numbers for Calinfornia are less than $10 million.
Other than headlines, I am not sure what he is trying to get with this one. 

baileyaustin's picture
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Doug is paying brokers that accepted the LP two years ago even though it wasn't issued.

josephjones107's picture
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$75 mil is NOT a slap on the wrist for a company like this. Morgan Stanley and Putnam were fined $50mil each and those companies are MUCH bigger players than Jones. This hurts EDJ BIG TIME.

I have to admit this surprises me more than anyone. I'm at a loss for words. This is real, real bad for EDJ. This has to be the single biggest blow this firm has ever seen.

uwec86's picture
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107,
And I got the ball rollin!!!!!
This is the best Christmas ever!!!

The Truth's picture
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I agree this is far from a slap.  Morgan Stanley did get hit $50 and they laughed at that.  $75 million is almost 1/2 of their net revenues from last year.  And we haven't even touched on the class action suit.  Let me just say the lead plantiff attorney is chomping at the bit on this slam dunk case.
What does Jones do to come back from this?  One last thing is the AXA case and what that means to Jones.  You don't hear much about this but if this comes back in play Jones will be paying out of pocket again. Just remember Jones brokers the policy regarding NAV transfers.  They were there if you wanted them, but you did not have to go that direction.  Hartford obviously is the biggest player here.  But the AXA case states that if a fund company offered an NAV transfer then it had to be used.  We all know brokers that moved to Hartford because of the high 12B-1 fees and received an upfront commission.
Maybe that compliance everyone said is so stiff is starting to rear its ugly face.

frankstrom's picture
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First, in cases likes these the consideration is not the company size but rather the revenues generated.  This fine is less one years worth of 12b-1 fees.
Second, we need to put the Jones hating away and look at this from an industry prospective.  All of the companies involved were compliant regarding disclosure but regulators wanted more.  Changes would have taken years so the open and investigation and extort money and changes from the firms. 

josephjones107's picture
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Frankstrom I don't understand your argument.

Morgan Stanely Revenues=$36 billion

Edward Jones Revenues =$2 billion

noggin's picture
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The case was about disclosure of revenue sharing agreements. They are not wrong but they must be disclosed to clients. They weren't therefore the settlement today.

noggin's picture
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Joseph- Apples vs Oranges.

The Truth's picture
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FRANSTRUM-
I don't understand your math.  $2.2 billion gross revenue and $203 million net revenue.  $75 million seems to be pretty significant would you agree?  As far as disclosure the revenue sharing was never disclosed and Jones new it could not make an argument.
NOGGIN-
It is apples and apples as both companies are in the investment industry.  For Jones to get fined $75 million vs. $50 for Morgan Stanley seems to me that they were sending a message or there was more seriousness to this claim.
 
 

Player's picture
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FRANKSTRUM....
Let me be the first or is it the 100th to say we told you so........
I was blasted for weeks when I said this hit would be major, but all of the Drones & Clones just kept attacking me, as well as others that posted here, with the same thoughts.
The fact is this is just the start !  75 Milion is a MAJOR FINE, and it's not over................................
Add to this Jones just stated to all their IR's that they had a 1% growth rate in recruiting........wow.. I got blasted when I said it was 3%, as it turns out I was too positive.
Things they are a changin at Edward Jones............ 
 

zacko's picture
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Frank, 
Jones collect continual revenue sharing from vendors based upon assets on the books.  It was only disclosed in small print a a few prospectuses and not in a clear way.  The only firm which explained it in a clear way was Van Kampen who also named Edward Jones specifically within the prospectuses.  In all cases, it was not easy to find.
107, Was that you who said they had heard that was going to be no settlement? 
The fine is just a little less than one years revenue sharing fees.  12b-1 fees are more on average and are unrelated to the revenue sharing fees collectd from the vendors.  Also, Jones keeps nearly all of the revenue sharing fees.  There is only a small % that the brokers recieve.
I would like to point out that this is NOT a reason to leave Edward Jones.  Sure, I think the fine was deserved but there many additional reasons which are better to depart from Jones other than this settlement. 
To me, this settlement will force Jones to play by the rules in more aspects of the business than before.  They will go out of their way to be compliant in all areas.  They will be on the radar screens of federal and state regulators more than before.  This is clearly a negative for the brokers of the firm in many ways and I am curious to see if they adjust bonus brackets and what returns will be on LP.  Remember, LP has a guaranteed return of 7.5% per annum.  So, they will have to pay that at a bare minimum.
It's refereshing to see a firm that lies and misleads their brokers about how they are so "client first", get slapped with a serious fine for not putting the client first.  
It's a good day for justice.
 

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Even so, California Attorney General Bill Lockyer called the settlement "inadequate" given payments from the funds that he said totaled about $300 million since January 2000, and declined to join it and filed a civil lawsuit against Edward D. Jones yesterday in Sacramento County Superior Court.
Mr. Lockyer called Edward D. Jones "the most egregious example we have reviewed so far" of secret revenue-sharing arrangements. California's suit, if it reaches trial, could seek repayment of the entire amount the brokerage house received, plus the "hundreds of millions" lost by investors who were sold inferior funds, Mr. Lockyer said.....WSJ
Tomorrow fancy boy Doug will likely go wing shooting in his private hunting club out in the Missouri hills....crumpets and tea Mr. Hill?  

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The settlement does not call for Jones to stop accepting revenue sharing payments. "Revenue sharing itself is not illegal," Martin said. The problem was that the payments were not disclosed and, at the same time, they created incentives for brokers, he said. But critics remain uncomfortable with the payments, whether or not they are disclosed. Michael Alderson, professor of finance at St. Louis University, said paying brokers to sell a mutual fund not only created the potential for a conflict of interest but also could backfire on the funds. "It certainly would lead a lot of people to ask, 'Why does the mutual fund have to pay the broker to recommend it, if it's so good to begin with?'" he said.
http://www.stltoday.com/stltoday/business/stories.nsf/0/9438 CF021F19AECE86256F71001A0FCD?OpenDocument&Headline=Edwar ds+Jones+Co.+will+pay+penalty

uwec86's picture
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Did I mention what a Happy Holiday I'm having?

go_rascals's picture
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Not privy to everything but Jones, through GP and LP capital has far more than this in reserves and quite frankly, I'd be surprised if this affects much of anything there. 

Jonestown's picture
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The firm has sold nearly $6 billion in mutual funds in California since January 2000 to nearly 300,000 accounts. Lockyer said 98% of the funds sold during that time were from the preferred group.... USA Today.
The big issue is the claim by Jones of "no proprietary products".  This arrangement with fund companies, and the resulting concentration of investment into them, is equivalent to manufacturing your own product.  Just a horse of a different color....They might as well rename Putnam Funds.....Edward Jones Fund family.  After all, they've underperformed right up there with Merrill funds! 
 

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"Edward Jones broke the law and broke faith with the working families of California who placed their trust in the company's investment recommendations, " Lockyer said in a prepared statement.
http://www.sfgate.com/cgi-bin/article.cgi?f=/c/a/2004/12/21/ BUG01AESBG1.DTL

Jonestown's picture
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Meanwhile in Edward Jones’ home state of Missouri, the state attorney general’s office has said it will not file a suit if the firm meets certain requirements over the next two years, including allowing clients to change their mutual funds free of charge.
Soooo, let me visualize this.... client comes in and says "I want to change to a better fund"..... broker says "why of course....we have six others to choose from..... no charge".  "But I need to tell you, this time, that we get a kick back for this no cost exchange..ok?"
 

RadioOne's picture
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Wrong-o, Jonestown.  They can switch to any one of the 150 funds Jones has a dealer agreement with.  You people on this board REALLY need to get a life .. I'm guessing the average age here is about 26. 

compliancejerk's picture
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RadioOne,
And pray tell why is your firm permitting that?
Thanks for the age compliment, I use Oil of Olay 

illuminati's picture
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Remember me???? 
I left the message board about six months ago, and vowed not to return until the last of 5 predictions I made came true.  Yesterday's $75 Million OFFER by Edward Jones was the last of the 5.
I specifically predicted $50-100 Million for this settlement, and was verbally stoned.  $75 Million plus California???  Looks like I wasn't too far off.
I shall, however, say "I told you so" only once, as the intention of this posting is not to gloat.
So what is the intention??  If there is anyone left at Jones with at least half of a mind, a half decent book, and half of your nerve left, this should be your wake-up call.  LEAVE. It only gets worse from here...........
ILLUMINATI
 
 
 

Greenbacks's picture
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I think I owe all you Exjones  guys an appoligy for always talking about Jones! You where right to keep bad mouthing them and warning green horns about a horrible firm.
I am sorry !  
Thank God I am Indy! And yes I am Liking it!
My bet is Jone is out of business in 5 to 10 years! 
Merry Chirstmas!

RadioOne's picture
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Greenbacks:  If you are as good at financial planning as you are at spelling, capitalization, and basic grammer techniques, it's a good thing you're gone!
Illuminati:  Golly, Mr. Wizard, tell us what will happen next!  Should I really quit?  Please share with all the 20-somethings on this board your wisdom beyond your years!!
The only reason anyone would spend so much effort badmouthing Jones is because you were a FAILURE there.  And don't bother responding with a bunch of made-up production numbers.  Everyone here knows you're lying.  Go watch SpongeBob, junior.
 
 
 
 

Watcher's picture
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Grammar, not grammer

salesprevention's picture
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You won't like this but even with the $75 million EDJ is still profitable this year.  Most of the money was set aside already.  Bonuses (which are are up, AGAIN) pay out tomorrow.  An extra bonus was announced for January.  We start 2005 with this portion behind us.  Sure there are still challenges from class actions and CA but not a day goes by that we don't have any number of lawsuits against us.  Any firm our size will always be a target. 

Mr Hanky's picture
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"You won't like this but even with the $75 million EDJ is still profitable this year.  Most of the money was set aside already.  Bonuses (which are are up, AGAIN) pay out tomorrow.  An extra bonus was announced for January.  We start 2005 with this portion behind us.  Sure there are still challenges from class actions and CA but not a day goes by that we don't have any number of lawsuits against us.  Any firm our size will always be a target"
 
Clearly a Stlouis  A s s ociate.     As far as I know theres no bonus being paid tomorrow for brokers at Jones.  Most certainly no extra bonus in January.  Go back to your cube.

josephjones107's picture
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Joined: 2004-12-20

Any firm our size will always be a target. Are you saying the smaller firms are targets??

               Revenues
Merrill        $27 billion
Morgan Stanley $34.9 billion
Goldman Sachs   $23 billion

Edward Jones    $2 billion

Jonestown's picture
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Joined: 2004-12-01

Hypocrisy...insincerity by virtue of pretending to have qualities or beliefs that you do not really have
Values...Set of beliefs or standards that the organization (i.e., organizational values) and its stakeholders (i.e., personal values) believe in and operate from. Organizational values are utilized to guide the day-to-day operations, serving as a linkage between Mission (i.e., present operations) and Vision (i.e., intended direction). Personal values are utilized to allow organizational members to understand how their own beliefs fit into the organizational values and its intended operations and direction.
Ignorance...the lack of knowledge or education
Your leadership has abandoned the values of Ted Jones and those of us who helped build that firm.  The leadership of the firm is a disgrace to the Jones name, and to his memory.  What's worse is the Hypocrisy of investment professionals who profess to give independent unbiased advice, while accepting bonus money and trips for selling inferior products to those who trusted them.  Now that you are faced with the truth about your firm, you can no longer use ignorance as an excuse to stay. 
You can figure out ethical on your own. When your firm makes no profit on it's operations without the kick back money, you must conclude that your bonus is dirty money....sleep well.  

westy's picture
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Joined: 2004-12-21

I have been away from the forums here for a long time. But today's thrilling news has brought me back.
$75,000,000 settlement to the SEC. And the California Attorney General is suing the all knowing, always do what is right for your client, self righteous Edward D. Jones for $300,000,000!!!! This has made my day and then some! Merry Christmas Edward D. Jones!! And a happy($300,000,000) New Year.
I am could not be happier that I left that place and I am thiving as an independent broker.
 

salesprevention's picture
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Hey Mr. Hanky,
Care to wager on the bonus in January?  Apparently my cube is more aware of what's going on than yours.
 
Broker's Trimester bonus comes at the end of the month I believe.  St. Louis gets theirs tomorrow.  

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Welcome back Illuminati & Westy

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