Lawsuit: EDJ Securities Reverse-Churning of Dead Assets

[DHK]

https://www.bizjournals.com/denver/prnewswire/press_releases/Colorado/2018/03/31/LA53878

The Complaint alleges that Edward Jones executed a reverse churning scheme to take advantage of trusting, long-standing clients and unlawfully shift their commission-based accounts to a fee-based program – Edward Jones Advisory Solutions ("Advisory Solutions") or Edward Jones Guided Solutions ("Guided Solutions") (collectively, "Advisory Programs").

In orchestrating this scheme to churn revenue from essentially dead assets, Edward Jones made misleading statements and material omissions to their clients about the amount of fees they would pay after their assets were moved into one of the Advisory Programs and about Edward Jones' preference for investing in proprietary funds only available through Advisory Solutions.

In addition, Defendants breached their fiduciary duties because clients who engaged in little to no trading activity paid more in fee-based accounts than they did in commission-based accounts and clients who were invested in a proprietary fund were entitled to know about Defendants' competing interests that caused them to make self-interested investments on their clients' behalf.

Well, this will certainly test the DOL ruling before their decision in early May.

 

[Tahoe Ray]

https://www.bizjournals.com/denver/prnewswire/press_releases/Colorado/2018/03/31/LA53878



Well, this will certainly test the DOL ruling before their decision in early May.

I thought all commissions were evil and charging AUM fees was the only righteous path.

 

[Justin Bilyj]

Alarming most articles don't ever mention the cost comparison of a 1% fee vs commission over time...

How a 1% Fee Could Cost Millennials $590,000 in Retirement Savings

 

[VolAgent]

I'm kind of surprised this hasn't happened already. Wasn't the EDJ model A shares and stocks? I believe their ads say they have roughly $1 trillion AUM, I wonder how much of that is "dead"?

And the old model "hot tips" are basically dead as well, so I suspect there isn't a ton of movement in their AUM either.

I remember the one time I spoke with someone about moving to managed money versus funds and stocks, and I just couldn't grasp what he was doing to deserve 1% or so in management fees.