Edward Jones will pay $1.1 million to settle FINRA's case accusing the firm of failing to produce phone records involving 10 investigations over four years in a timely and complete manner.
The St. Louis-based wealth management firm also made inaccurate representations to FINRA's investigators about which "call detail records" logging the two numbers, length, date and time of the phone conversations were available and failed to notify the regulator promptly after finding out about its mistakes,
Compared to the size of Edward Jones and its 17,900 financial advisors
"Edward Jones is not a small firm," he said. "Phone records are not an esoteric requirement from a regulator. They're often used in litigation. It's very surprising that they didn't say, 'We'll get someone on this and have it to you.'"
In the last regulatory case in November, Edward Jones agreed to pay a fine of $150,000 plus $25,000 in additional investigative costs to the Washington State Department of Financial Institutions to resolve a case alleging it failed to reasonably supervise an advisor who accepted gifts and loans "from an elderly client" totaling $550,000, according to FINRA BrokerCheck. The firm didn't admit or deny FINRA's allegations in settling its latest case.
"We take our responsibilities to produce information in regulatory inquiries very seriously and have remedied the issues raised in this matter," Edward Jones spokeswoman Stephanie Zoller Mueller said in an emailed statement.
The firm breached FINRA guidelines obliging firms to provide information responsive to investigations and uphold "high standards of commercial honor and just and equitable principles of trade," according to the settlement. The case revolved around a new policy Edward Jones carried out in February 2017, when it began purging call records older than 18 months from one of its internal network drives, investigators said. The firm didn't apply that policy to a separate "business planning" network drive that had the same phone records, though, FINRA said.
Between May 2017 and March 2021, Edward Jones received the regulator's requests for call records dating back more than 18 months in 10 different investigations, according to the settlement.
"The investigations involved allegations of potential misconduct, including unauthorized trading, discretionary trading and excessive trading," the document said. "In responding to these requests, the firm failed to search Location B, which contained call detail records older than 18 months and thus housed responsive documents. In addition, in eight of the investigations, the firm inaccurately represented in the text of its responses or in a legend attached to its productions, that records older than 18 months were not available."
In July 2019, members of the firm's team responsible for such inquiries realized that they should have been checking the alternate network drive for the phone files, according to investigators. It took another eight months before they alerted FINRA to the issue, and Edward Jones still failed to search the other drive as part of two other investigations or identify all of the inquiries in which its answers to regulators were "likely incomplete," investigators said. Another year elapsed before the company made that list, and two years went by before it contacted the affected parties in each investigation, according to the settlement order.
Besides the fine, Edward Jones accepted a censure and agreed to certify in writing within 90 days that it has changed its policies and procedures to abide by FINRA's rules.
