Edward Jones, Osaic and Cambridge Investment Research have agreed to pay investors more than $8.2 million as a refund for mutual fund fees that regulators say should have been waived.
The Financial Industry Regulatory Authority, broker-dealers' self-regulator, accused the three firms of not doing enough to make sure their clients took advantage of mutual funds' so-called reinstatement policies. These policies allow investors who have sold shares of a mutual fund to reinvest in the same fund without having to pay a new front-end sales charge or to claim a rebate on sales charges.
FINRA alleged Edward Jones, Osaic and Cambridge Investment failed to set up a supervisory system meant to track whether their clients were taking full advantage of their reinstatement rights. As a result, according to regulators, Edward Jones customers paid roughly $4.44 million in unnecessary sales charges and fees between January 2015 and June 2020. Customers of Osaic and its affiliated broker-dealers paid an additional $3 million between January 2017 and August 2022. And Cambridge Investment clients paid an additional $699,217 between January 2015 and March 2022.
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In its settlements, FINRA said it decided against charging the firms fines on top of restitution because all three had cooperated in its investigations.The regulator said the cases stem from targeted examinations it began performing in 2020. So far, those investigations have yielded $9.5 million in restitution for mutual fund investors, according to FINRA.
"It is essential that firms ensure their customers receive all fee waivers and rebates owed," said Bill St. Louis, FINRA executive vice president and head of enforcement, in a statement. "At the same time, FINRA recognizes firms that proactively correct errors, identify and repay harmed investors and provide substantial assistance to FINRA during its investigations."
Spokespeople for Osaic and Cambridge Investment Research declined to comment.
An Edward Jones spokesperson said, "We cooperated fully with FINRA and are pleased to have resolved this matter. We take this matter seriously and have made enhancements to our policies, procedures and practices. Our top priority remains serving our clients and helping them achieve financially what is most important to them and their families."
In settling with FINRA, the three firms neither denied nor admitted to the allegations.
