FINRA Fines Edward Jones for Supervisory Failures

The broker-dealer issued some 52 million client reports without required supervision, the regulator says

The regulatory group's New York office. The regulatory group's New York office.

The Financial Industry Regulatory Authority fined Edward Jones $725,000 over its failure to set up, keep and enforce a supervisory system of consolidated reports from 2010 to 2014—when its roughly 16,000 advisors created and shared about 52 million client reports.

Outside asset information was included in the report, but Edward Jones “had no system or written procedures in place reasonably designed to minimize the risk that the reports could contain inaccurate information that potentially could be missed used,” according to the disciplinary action, which was finalized on Thursday.

Over the four-year period, FINRA says, the reports contain disclosures stating “the reports are not account statements and should not be relied upon as account statements,” the reports were “created as a courtesy and … may include information about assets that are not held at or may not have been verified by Edward Jones.”

According to an Edward Jones spokesperson, “We're pleased this matter has been resolved.”

In its findings, FINRA acknowledged that its review of some 65,000 reports “did not reveal any instances that were materially inaccurate or misleading.”

Still the regulator pursued that matter as it was required to under FINRA Rule 2210 and NASD Rule 3010(a).

“Edward Jones has enhanced its supervision to address the issues raised by FINRA related to the creation and distribution of consolidated reports,” the broker-deal said. “FINRA has been investigating the use and supervision of consolidated reports since 2011 and has reached settlement with several other broker-dealers.”

Wells Fargo, for instance, was required to pay $1 million over similar issues with its reports in 2016.

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