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Jul 17 2017

FINRA Fines Edward Jones $725,000 For Inadequate Supervision of Consolidated Reports

The Financial Industry Regulatory Authority has fined St. Louis-based broker-dealer Edward Jones $725,000 for allegedly failing to establish, maintain, and enforce an adequate supervisory system for the creation and dissemination of consolidated reports issued by its registered representatives.

Between 2010 through 2014, FINRA alleges that the firm provided its registered representatives with two automated tools to generate consolidated reports that could be used to present comprehensive financial information to customers, including outside asset information. During that time, the firm’s reps generated approximately 52 million reports using the two tools.

While Edward Jones used internally approved templates that contained disclosures, it had no system or written procedures in place to minimize the risk that the reports could contain inaccurate information that could potentially be misused.

The reports could also be printed for customer use, but the firm could only track whether a report was printed and had no system in place to ensure it was delivered to customers. In addition, due to an unintentional design flaw, one of the tools also allowed registered representatives to manually edit assets held at the firm.

A retrospective review of a sample of approximately 65,000 reports did not reveal any instances that were materially inaccurate or misleading.

FINRA noted that Edward Jones has since implemented “extensive” remedial changes, including enhanced disclosures, new procedures and mechanisms for verifying outside assets, and surveillance that detects gaps in information between the reports and the firm’s outside business activity database.

Edward Jones, which has no relevant disciplinary history with FINRA, has been registered since 1939 and has more than 17,000 registered persons in 12,000 branch offices nationwide.

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Article by: The DI Wire

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