Edward Jones has agreed to a $34 million settlement to resolve allegations of widespread discrimination against Black advisors, committing to a reform program to boost hiring, compensation and advancement opportunities for advisors of color.
The case dates to a class-action lawsuit
The lawsuit, which was later joined by two other former Edward Jones advisors, represents a class of advisors employed by the firm from 2014 through 2020 whose career opportunities allegedly were limited by a systemic climate of racial discrimination.
The court had denied Edward Jones' motion to dismiss the case following oral arguments, and the litigants entered into third-party mediation, eventually producing the settlement, which now awaits approval from a federal court in Illinois.
Edward Jones acknowledged the settlement, but declined to comment on the merits of the case.
"We reached this agreement because it is in the best interest of Edward Jones and allows our firm to move forward," spokeswoman Regina Deluca-Imral said in an emailed statement.
Deluca-Imral pointed to an
At the time, Edward Jones said it would conduct an analysis of pay in its home offices, expand its programs around unconscious bias training, and promote "cultural awareness and empathy." The firm also announced a planned contribution to the National Urban League and said it would expand its support for the organization's chapter in St. Louis, where the firm is based.
"We remain committed to creating a place of belonging for our associates and our clients and making a positive impact in our communities," Deluca-Imral says. "Edward Jones takes its commitments to diversity, equity and inclusion seriously and will continue to listen, learn, take responsibility and act in accordance with its values and purpose to make a positive impact in the lives of its clients, colleagues and communities."
The RIA acquired the innovative practice while bulking up its social justice investing efforts and its wealth redistribution planning services.
Under the proposed class-action settlement, Edward Jones is committing to formalize some of those efforts. The firm agreed to terms setting out a three-year period that will see Edward Jones convene an advisory panel "comprised of a diverse cross-section of Edward Jones FAs, who will meet regularly to identify and address issues of diversity, equity and inclusion," according to the settlement. "The FA Advisory Council will convene a focus group of African American advisors who will meet with Edward Jones leadership to explore and develop ideas and initiatives to increase representation and opportunity for African American advisors."
The class-action lawsuit described "firm-wide practices" that purposely excluded African American advisors from advisor teams, assigned them to less profitable territories, and limited their access to business resources and client accounts.
Under the settlement, Edward Jones will direct its inclusion and diversity department to study data on the representation, hiring and attrition of African American advisors, and report its findings to the firm's senior leadership.
Edward Jones has also agreed to forgive training costs of up to $75,000 for advisors who left the firm before Jan. 1 of this year, and to lower the repayment obligation from $75,000 to $50,000 going forward. The plaintiffs contend that the forgiveness of training costs alone could provide more than $20 million of relief for members of the class.
"Because of the high attrition rate of African American FAs, the training cost obligation disproportionately affect[s] African Americans, many of whom suffered financial harm or were driven from the industry out of fear of the firm's collection efforts," according to the proposed settlement.
The $34 million fund that Edward Jones would set up through the settlement would be overseen by Lynn P. Cohn, director of the Center on Negotiation and Mediation at the Northwestern School of Law. Cohn would supervise the disbursement of the funds to the members of the class, who could either file a simple claim form seeking an expedited payout, or make a more detailed submission seeking "an individualized assessment of their claims, including consideration of post-employment financial loss and any emotional distress suffered."
