Jones Pays

WHERE?????

TO WHOM????

FOR WHAT ???? 

Reuters

Please post the link

All I could find was a blurb on the WSJ site.

http://online.wsj.com/public/ushttp://

I guess there will be a run on tomorrow's WSJ .... and who said there wasn't a Santa Claus???

Edward Jones to Pay $75 Million
To Settle Fund-Steering Charges

By DEBORAH SOLOMON
Staff Reporter of THE WALL STREET JOURNAL
December 20, 2004 12:42 p.m.

Edward D. Jones & Co. has agreed to pay $75 million to settle charges with federal securities regulators that it steered investors to certain mutual funds without disclosing that the firm received compensation from those funds, according to people familiar with the matter.

The Securities and Exchange Commission, the National Association of Securities Dealers and the New York Stock Exchange have tentatively agreed to the settlement, these people said. A final agreement could be approved by the SEC as early as this week.

State of California also is filing suit...which will be huge.

That's a big fine for a firm like Jones.  Lets see where the money comes from.   

Edward Jones to Pay $75 Million
To Settle Fund-Steering Charges

By DEBORAH SOLOMON
Staff Reporter of THE WALL STREET JOURNAL
December 20, 2004 12:42 p.m.

Edward D. Jones & Co. has agreed to pay $75 million to settle charges with federal securities regulators that it steered investors to certain mutual funds without disclosing that the firm received compensation from those funds, according to people familiar with the matter.

The Securities and Exchange Commission, the National Association of Securities Dealers and the New York Stock Exchange have tentatively agreed to the settlement, these people said. A final agreement could be approved by the SEC as early as this week.

Regulators are expected to accuse St. Louis-based Edward Jones of marketing seven funds to investors as the "best" without disclosing that the funds had paid to be included on that list of fund families. An Edward Jones spokesman didn't immediately return calls seeking comment.

The case is part of the SEC's broad probe into conflicts of interest at mutual funds and brokerage firms. Regulators have been looking into how brokers are compensated for selling funds, including whether customers are aware of any financial relationships between the broker and the mutual funds they sell.

This will be the second case the SEC has brought against a brokerage firm related to so-called "revenue sharing." Last year, the SEC brought civil charges against Morgan Stanley and fined it $50 million for conflicts of interests, including directing investors to certain funds based on commissions the firm received. While revenue sharing isn't illegal, brokers are required to steer investors to products that are best for them and can't take compensation into consideration when deciding where a client should put his or her money. Any financial relationships must also be disclosed.

The SEC has settled similar charges with some fund companies and is expected to bring additional cases next year against both fund firms and brokerage houses.

Write to Deborah Solomon at [email protected]

I cant wait to see where that money is going to come from!  I agree that is a heck of a lot of money for a firm like EDJ.  Merry Christmas Edward Jones.  I hope 2005 is even worse for you!  Bring on California! 

I think the question might end of being, who will be buying Jones. I find it hard to believe that they don’t need help from a white knight with this sort of thing.

Can somebody tell us what the company line is today around Jones?  Hawkeye, what says Doug Hill today? 

Perhaps it's "Don't worry.  We chose to pay this money out of the goodness of our hearts, not because of any 'legal' requirement.  The greatest sales force in the world will pay it off with ease"

A friend of mine there tells me they are given very little information on what is going on.  They are basically in the dark other than the GPs.      

Couldn’t happen to a nicer group of con-artists. 

This truly is an all Jones board.  Amazing that such an insignificant topic gets so many hits and replies. 

All you ex-Jones reps must find something else to talk about.  It is like getting a divorce and spending the rest of your life talking about your ex-...

Get over it and move on.

Dewey-

Thanks for the hit and reply.

Jones agreed to the fines and chose not to even argue them?  Maybe they feel they got off too easy?

I'm sure as hell glad I am no longer a holder of that ridiculous LP. 

Just read the un-printable Doug Hill letter at a Jones office.  Not over the top but he does say that GP and LP payouts will be down until reserves are built back up. 

But why is this such a low number?  I remember doing the numbers in my head this year when the others settled and figured Jones was looking at $200-250 million.  This is a slap on the wrist.

While I thought the whole thing was cr^p from the beginning, Jones skated on this compared to the other settlements.

Dear Sirs/Ma'ams

I hereby retract the item I posted previously about having regrets for leaving Jones.

Sincerely,

Bearcat

Just finished reading the California lawsuit against Jones.  The AG must have some kind of pissing contest with the NYAG.  He makes a lot of misleading statements.  He throws around the $300 million figure when the numbers for Calinfornia are less than $10 million.

Other than headlines, I am not sure what he is trying to get with this one. 

Doug is paying brokers that accepted the LP two years ago even though it wasn’t issued.

$75 mil is NOT a slap on the wrist for a company like this. Morgan Stanley and Putnam were fined $50mil each and those companies are MUCH bigger players than Jones. This hurts EDJ BIG TIME.



I have to admit this surprises me more than anyone. I’m at a loss for words. This is real, real bad for EDJ. This has to be the single biggest blow this firm has ever seen.

107,

And I got the ball rollin!!!!!

This is the best Christmas ever!!!

I agree this is far from a slap.  Morgan Stanley did get hit $50 and they laughed at that.  $75 million is almost 1/2 of their net revenues from last year.  And we haven't even touched on the class action suit.  Let me just say the lead plantiff attorney is chomping at the bit on this slam dunk case.

What does Jones do to come back from this?  One last thing is the AXA case and what that means to Jones.  You don't hear much about this but if this comes back in play Jones will be paying out of pocket again. Just remember Jones brokers the policy regarding NAV transfers.  They were there if you wanted them, but you did not have to go that direction.  Hartford obviously is the biggest player here.  But the AXA case states that if a fund company offered an NAV transfer then it had to be used.  We all know brokers that moved to Hartford because of the high 12B-1 fees and received an upfront commission.

Maybe that compliance everyone said is so stiff is starting to rear its ugly face.

First, in cases likes these the consideration is not the company size but rather the revenues generated.  This fine is less one years worth of 12b-1 fees.

Second, we need to put the Jones hating away and look at this from an industry prospective.  All of the companies involved were compliant regarding disclosure but regulators wanted more.  Changes would have taken years so the open and investigation and extort money and changes from the firms. 

Frankstrom I don’t understand your argument.









Morgan Stanely Revenues=$36 billion



Edward Jones Revenues =$2 billion

The case was about disclosure of revenue sharing agreements. They are not wrong but they must be disclosed to clients. They weren’t therefore the settlement today.

Joseph- Apples vs Oranges.

FRANSTRUM-

I don't understand your math.  $2.2 billion gross revenue and $203 million net revenue.  $75 million seems to be pretty significant would you agree?  As far as disclosure the revenue sharing was never disclosed and Jones new it could not make an argument.

NOGGIN-

It is apples and apples as both companies are in the investment industry.  For Jones to get fined $75 million vs. $50 for Morgan Stanley seems to me that they were sending a message or there was more seriousness to this claim.

FRANKSTRUM....

Let me be the first or is it the 100th to say we told you so........

I was blasted for weeks when I said this hit would be major, but all of the Drones & Clones just kept attacking me, as well as others that posted here, with the same thoughts.

The fact is this is just the start !  75 Milion is a MAJOR FINE, and it's not over................................

Add to this Jones just stated to all their IR's that they had a 1% growth rate in recruiting........wow.. I got blasted when I said it was 3%, as it turns out I was too positive.

Things they are a changin at Edward Jones............ 

Frank, 

Jones collect continual revenue sharing from vendors based upon assets on the books.  It was only disclosed in small print a a few prospectuses and not in a clear way.  The only firm which explained it in a clear way was Van Kampen who also named Edward Jones specifically within the prospectuses.  In all cases, it was not easy to find.

107, Was that you who said they had heard that was going to be no settlement? 

The fine is just a little less than one years revenue sharing fees.  12b-1 fees are more on average and are unrelated to the revenue sharing fees collectd from the vendors.  Also, Jones keeps nearly all of the revenue sharing fees.  There is only a small % that the brokers recieve.

I would like to point out that this is NOT a reason to leave Edward Jones.  Sure, I think the fine was deserved but there many additional reasons which are better to depart from Jones other than this settlement. 

To me, this settlement will force Jones to play by the rules in more aspects of the business than before.  They will go out of their way to be compliant in all areas.  They will be on the radar screens of federal and state regulators more than before.  This is clearly a negative for the brokers of the firm in many ways and I am curious to see if they adjust bonus brackets and what returns will be on LP.  Remember, LP has a guaranteed return of 7.5% per annum.  So, they will have to pay that at a bare minimum.

It's refereshing to see a firm that lies and misleads their brokers about how they are so "client first", get slapped with a serious fine for not putting the client first.  

It's a good day for justice.

Even so, California Attorney General Bill Lockyer called the settlement "inadequate" given payments from the funds that he said totaled about $300 million since January 2000, and declined to join it and filed a civil lawsuit against Edward D. Jones yesterday in Sacramento County Superior Court.

Mr. Lockyer called Edward D. Jones "the most egregious example we have reviewed so far" of secret revenue-sharing arrangements. California's suit, if it reaches trial, could seek repayment of the entire amount the brokerage house received, plus the "hundreds of millions" lost by investors who were sold inferior funds, Mr. Lockyer said.....WSJ

Tomorrow fancy boy Doug will likely go wing shooting in his private hunting club out in the Missouri hills....crumpets and tea Mr. Hill?  

The settlement does not call for Jones to stop accepting revenue sharing payments. "Revenue sharing itself is not illegal," Martin said. The problem was that the payments were not disclosed and, at the same time, they created incentives for brokers, he said.

But critics remain uncomfortable with the payments, whether or not they are disclosed. Michael Alderson, professor of finance at St. Louis University, said paying brokers to sell a mutual fund not only created the potential for a conflict of interest but also could backfire on the funds.

"It certainly would lead a lot of people to ask, 'Why does the mutual fund have to pay the broker to recommend it, if it's so good to begin with?'" he said.

http://www.stltoday.com/stltoday/business/stories.nsf/0/9438 CF021F19AECE86256F71001A0FCD?OpenDocument&Headline=Edwar ds+Jones+Co.+will+pay+penalty

Did I mention what a Happy Holiday I’m having?

Not privy to everything but Jones, through GP and LP capital has far more than this in reserves and quite frankly, I'd be surprised if this affects much of anything there. 

The firm has sold nearly $6 billion in mutual funds in California since January 2000 to nearly 300,000 accounts. Lockyer said 98% of the funds sold during that time were from the preferred group.... USA Today.

The big issue is the claim by Jones of "no proprietary products".  This arrangement with fund companies, and the resulting concentration of investment into them, is equivalent to manufacturing your own product.  Just a horse of a different color....They might as well rename Putnam Funds.....Edward Jones Fund family.  After all, they've underperformed right up there with Merrill funds! 

"Edward Jones broke the law and broke faith with the working families of California who placed their trust in the company's investment recommendations, " Lockyer said in a prepared statement.

http://www.sfgate.com/cgi-bin/article.cgi?f=/c/a/2004/12/21/ BUG01AESBG1.DTL

Meanwhile in Edward Jones’ home state of Missouri, the state attorney general’s office has said it will not file a suit if the firm meets certain requirements over the next two years, including allowing clients to change their mutual funds free of charge.

Soooo, let me visualize this.... client comes in and says "I want to change to a better fund"..... broker says "why of course....we have six others to choose from..... no charge".  "But I need to tell you, this time, that we get a kick back for this no cost exchange..ok?"

Wrong-o, Jonestown.  They can switch to any one of the 150 funds Jones has a dealer agreement with.  You people on this board REALLY need to get a life … I’m guessing the average age here is about 26. 

RadioOne,

And pray tell why is your firm permitting that?

Thanks for the age compliment, I use Oil of Olay 

Remember me???? 

I left the message board about six months ago, and vowed not to return until the last of 5 predictions I made came true.  Yesterday's $75 Million OFFER by Edward Jones was the last of the 5.

I specifically predicted $50-100 Million for this settlement, and was verbally stoned.  $75 Million plus California???  Looks like I wasn't too far off.

I shall, however, say "I told you so" only once, as the intention of this posting is not to gloat.

So what is the intention??  If there is anyone left at Jones with at least half of a mind, a half decent book, and half of your nerve left, this should be your wake-up call.  LEAVE. It only gets worse from here...........

ILLUMINATI

I think I owe all you Exjones  guys an appoligy for always talking about Jones! You where right to keep bad mouthing them and warning green horns about a horrible firm.

I am sorry !  

Thank God I am Indy! And yes I am Liking it!

My bet is Jone is out of business in 5 to 10 years! 

Merry Chirstmas!

Greenbacks:  If you are as good at financial planning as you are at spelling, capitalization, and basic grammer techniques, it's a good thing you're gone!

Illuminati:  Golly, Mr. Wizard, tell us what will happen next!  Should I really quit?  Please share with all the 20-somethings on this board your wisdom beyond your years!!

The only reason anyone would spend so much effort badmouthing Jones is because you were a FAILURE there.  And don't bother responding with a bunch of made-up production numbers.  Everyone here knows you're lying.  Go watch SpongeBob, junior.

Grammar, not grammer

You won't like this but even with the $75 million EDJ is still profitable this year.  Most of the money was set aside already.  Bonuses (which are are up, AGAIN) pay out tomorrow.  An extra bonus was announced for January.  We start 2005 with this portion behind us.  Sure there are still challenges from class actions and CA but not a day goes by that we don't have any number of lawsuits against us.  Any firm our size will always be a target. 

"You won't like this but even with the $75 million EDJ is still profitable this year.  Most of the money was set aside already.  Bonuses (which are are up, AGAIN) pay out tomorrow.  An extra bonus was announced for January.  We start 2005 with this portion behind us.  Sure there are still challenges from class actions and CA but not a day goes by that we don't have any number of lawsuits against us.  Any firm our size will always be a target"

Clearly a Stlouis  A s s ociate.     As far as I know theres no bonus being paid tomorrow for brokers at Jones.  Most certainly no extra bonus in January.  Go back to your cube.

Any firm our size will always be a target. Are you saying the smaller firms are targets??



               Revenues

Merrill        $27 billion

Morgan Stanley $34.9 billion

Goldman Sachs   $23 billion







Edward Jones    $2 billion

Hypocrisy...insincerity by virtue of pretending to have qualities or beliefs that you do not really have

Values...Set of beliefs or standards that the organization (i.e., organizational values) and its stakeholders (i.e., personal values) believe in and operate from. Organizational values are utilized to guide the day-to-day operations, serving as a linkage between Mission (i.e., present operations) and Vision (i.e., intended direction). Personal values are utilized to allow organizational members to understand how their own beliefs fit into the organizational values and its intended operations and direction.

Ignorance...the lack of knowledge or education

Your leadership has abandoned the values of Ted Jones and those of us who helped build that firm.  The leadership of the firm is a disgrace to the Jones name, and to his memory.  What's worse is the Hypocrisy of investment professionals who profess to give independent unbiased advice, while accepting bonus money and trips for selling inferior products to those who trusted them.  Now that you are faced with the truth about your firm, you can no longer use ignorance as an excuse to stay. 

You can figure out ethical on your own. When your firm makes no profit on it's operations without the kick back money, you must conclude that your bonus is dirty money....sleep well.  

I have been away from the forums here for a long time. But today's thrilling news has brought me back.

$75,000,000 settlement to the SEC. And the California Attorney General is suing the all knowing, always do what is right for your client, self righteous Edward D. Jones for $300,000,000!!!! This has made my day and then some! Merry Christmas Edward D. Jones!! And a happy($300,000,000) New Year.

I am could not be happier that I left that place and I am thiving as an independent broker.

Hey Mr. Hanky,

Care to wager on the bonus in January?  Apparently my cube is more aware of what's going on than yours.

Broker's Trimester bonus comes at the end of the month I believe.  St. Louis gets theirs tomorrow.  

Welcome back Illuminati & Westy

Hey Mr. Hanky,

Care to wager on the bonus in January?  Apparently my cube is more aware of what's going on than yours.

For brokers...there is no bonus in January A S Sociate.  Broker bonus is paid about Feb 15th for 3rd trimester. 

Are you from Field services dept?  Salesprevention would be an appropriate name if so. 

Mr. Hanky,

You don't need to get nasty.  If you were offered (additional) LP in the last offering (and accepted) you will be paid a "bonus" in January as though you had actually received it already.  At this point the amount is supposed to be the actual return on LP for 2004 (currently 19.83%). 

I'm not exactly sure why you are upset that I'm telling you there will be an extra bonus in January.

Im not upset.   Don't come on here like a white knight coming through a storm preaching all is well and times are good, in fact theres bonuses for all!  I'm tired of all the lies that are told and people like you who perpetuate them.

There were at least 3 inconsistencies from the "internal"  version that can't be printed by the way, and the article in the St Louis Post. Go read them both and then tell me Im wrong. 

By the way salesprevention, you are wrong.  The accrual of the phantom LP starts in Jan 05, it does not go back retroactive to 04. 

HEY YOU DRONES......

The only reason the Firm (Fraud) would pay Drones & Clones something for nothing (LP promised and not paid for ?), is because  ?

They are afraid you will wize up and  LEAVE !

Mark my words, the WORST is yet to come  !

California Dreaming is the tune..............................

[quote=RadioOne]

Illuminati:  Golly, Mr. Wizard, tell us what will happen next!  Should I really quit?  Please share with all the 20-somethings on this board your wisdom beyond your years!!

The only reason anyone would spend so much effort badmouthing Jones is because you were a FAILURE there.  And don't bother responding with a bunch of made-up production numbers.  Everyone here knows you're lying.  Go watch SpongeBob, junior.

[/quote]

#1 Should [you] really quit?  No.  After reading your complete pedantic response, my posting wasn't intended for you.  If you go back and read it carefully you will see I SPECIFICALLY intended it for Jones Reps with HALF a mind left.  My guess is, judging by your assumptuous and moronic diatribe, that your destiny is not that of the rats leaving the sinking ship, but rather the dead weight in the ship's hold which helps it to sink faster.

#2 "Please share with all the 20-somethings on this board your wisdom beyond your years!!"  I haven't been 20-something in a very long time, if that is part of what you are implying.  If it is mostly 20-somethings on this board, then it is they who have the chance.  It sounds to me that YOUR glass of kool-aid was emptied long ago.  DRINK UP!!

#3 Your dedication to scientific principles and discerning empiricism in assessing my character is overwhelming.  I warn Jones brokers to leave...therefore I am bad-mouthing Jones...therefore I must have been a FAILURE...  AMAZING!!!  Who is the "Wizard" now??

The beautiful part is your assumption that I will give you false production numbers, and then you can label me as a liar in advance.  How very convenient for you.

In my own defense (since you have drawn first blood, verbally):

I sincerely doubt I am YOUR junior. I left Jones making PLENTY of money (not yellow, or green or blue or purple...).  Finally, I would venture that any ONE of the SIX companies I am presently involved with is worth more than your book of business at Jones (Zero, I believe). 

Again, for anyone on the fence (twenty-something or not), LEAVE for your own good.  Jones has an archaic business model, an archaic communication system, and an archaic pay-out and support structure.  At this point, you can't go wrong by going ANYWHERE else.

Illuminati:

Wow! Six companies!!  Maybe after my company sinks I can ACAT all of my personal accounts to you!  Grow up, kid.

What a chucklehead I was. Instead of pushing inappropriate stocks on clients, Edward Jones could have pushed inappropriate funds on them. Stocks can't give kickbacks, but funds can. What Jones was doing was far worse than just recommending bad stocks.

Monday, this firm agreed to pay a gigantic fine, $75 million, and to stop this outrageous pay-to-play junk where preferred funds got tons of money in return for hefty fees on the back end. To think that this firm cloaked itself in conservative clothes is just outrageous. The company exhibited a stupefying two-facedness that makes me want to scream.

Of course, it will pay the fine and be allowed to stay in business. Everyone gets to stay in business. You would think it was in the Constitution or something, that it was written, that, no matter how outrageous the fiduciary violation, you still are good to go in the financial services business because once you are in, you are in.

When I started my radio show, I alleged that there were a lot of secret revenue-sharing agreements between brokers and funds because otherwise, the really crummy funds would have no customers. Who would deliberately stay with a crummy fund? Who is that stupid?

But I wasn't able to get the documents that told you who was paying to get money and who wasn't. We now have settled the problem when it comes to brokers. Next up? The kickbacks some of these human resources people have been taking to keep their companies with bad funds for the 401(k)s. Some of it will be kickbacks to the companies, others will be under the table. What else is new?

Would anyone mind taking a pledge with me to do what's best for the client over the long term, so both he and the client make big money? Is there anyone willing to raise his right hand and swear he will do his best for his client, not for his firm or himself?

From here, the silence sure seems deafening.

Player,  you are right they are afraid people will leave.   I’m glad I did 8 months ago, best career move I ever made.   I have a good friend still over there but he’s getting wiser every day.  In fact he told me about this board, said it would be like therapy.  He’s right.

So are jones clones reps getting a bonus or not? Boy I’m glad I left a year ago. They are in trouble. Bad place to be.

The real crime here is not that Jones took quasi-legal kickbacks.  The real crime is that they have not been punished heavily enough for their gross hypocrisy.  I began my career in 1982 with Jones by handing out copies of a magazine article extoling the virtues of the “conservative” investment company.  I personally witnessed brokers selling oil and gas limited partnerships as bond equivalents and I read Saturday morning wires offering a sleeve of golf balls if you sold an unrated bond.  I left because of the hypocrisy.  Frankly, there is an order to the world and when things get out of balance, they are brought back in line by a variety of means.  I fervantly hope that the class action lawsuits and the suit filed by the California AG will bring some semblance of justice to a “whore” brokerage firm and its band of koolaide drinking pimps.  By the way, Merry Christmas! 

dashampersand,

Well said.........

Dashampersand,

Perfectly written.  I left because of the hypocrisy as well, and can't agree more with your reference to "order" and "balance".  Jones HAD it, and blew it when they consciously decided to grow the firm, but not evolve the business model.

It's interesting to watch now.  They can't evolve because of their structure, and the world is not going to let them stay the way they are.  To invoke a little Darwin, they are at an evolutionary DEAD END.

Just saw this article showing that they have emails from Brokers to substantiate their claims.

Edward Jones Brokers Concerned Yrs Ago About Rev Sharing

By ARDEN DALE and KATHY CHU

December 21, 2004 4:40 p.m.

Of DOW JONES NEWSWIRES

NEW YORK -- Long before regulators got involved, Edward D. Jones brokers had expressed concerns about financial incentives they had to sell certain mutual funds.

In more than a dozen internal e-mail messages between Edward Jones employees - and released by California Attorney General Bill Lockyer this week as part of a civil lawsuit brought against the brokerage house - brokers questioned whether they were serving their clients' best interest if they were pitching mutual funds partly because they brought in higher revenue to the firm. The e-mails date as far back as 2001.

What concerned the employees who sent the e-mails were incentives that brokers got for steering investors to a small group of funds, some of which didn't have particularly good performance records.

"There is something dirty about the mutual fund business that has been developing over the last 5 years," one Edward Jones employee wrote in an e-mail dated May 17, 2001, going on to criticize the company's own policies. Another message, dated Dec. 8, 2003, expressed concern that "we could have a can of worms opened" if the firm's practices were looked at closely.

The e-mails, released Monday by Lockyer, provide a telling glimpse into how and why brokers push certain investments. Lockyer alleges that Edward D. Jones failed to tell investors about payments it got from seven mutual-fund companies: American Funds, Federated Investors Inc. (FII), Goldman Sachs Group Inc. (GS), Hartford Mutual Funds Inc., Lord Abbett & Co., Marsh & McLennan Co.'s (MMC) Putnam Investments and Van Kampen Investments.

Also this week, the company agreed to pay $75 million to settle similar charges by the Securities and Exchange Commission, the National Association of Securities Dealers and the New York Stock Exchange.

At issue is the practice of revenue-sharing, called "pay to play" by critics, in which financial relationships exist between brokers and the mutual funds they sell. Although not illegal, regulators who have looked at the practice say that failing to disclose these arrangements may be against the law.

Revenue sharing troubled people inside of Edward Jones partly because of how this apparent conflict-of-interest contrasted with the firm's image. One writer, in January 2004, said he was feeling "a bit disgusted now to work for a firm who portrays the image of being proper & moral in its practices" but that will "play a little dirty to get more revenue."

Another employee said some of the favored funds tried to sway brokers with spreadsheets showing how much bigger bonus checks would be if they pushed their funds over others. "Without question, this information has tainted my objectivity and has the potential to change the pattern of my investment recommendations," said the person in an e-mail dated Dec. 17, 2003.

The e-mails - many of which were addressed to a suggestion box at Edward Jones - bring into living color an issue that can seem dry as dust. Lockyer spokesman Tom Dresslar said the California attorney general gathered the documents as part of an investigation he has been conducting since earlier this year of mutual-fund practices.

"Whenever there's an investigation, typically there's an information request that includes e-mails," said Stan Keller, a securities lawyer at Palmer & Dodge in Boston. "As we've seen in a number of prominent situations, there could be a treasure trove found in the e-mails ... because of the candid nature of e-mails."

Edward Jones declined to comment on the e-mails.

The company is not the only one with an incentive to sell certain funds. Other brokerage firms that get paid for pitching a preferred list include Citigroup Inc.'s (C) Smith Barney unit, UBS AG (UBS), Wells Fargo & Co. (WFC), American Express Co. (AXP), Linsco/Private Ledger Corp. and Morgan Stanley (MWD), according to Cerulli Associates, a research and consulting firm in Boston.

Mutual-fund firms may pay up to 50 basis points in revenue-sharing and 12b-1 marketing fees to brokerage houses to be on their preferred lists, estimates Benjamin Poor, a senior analyst at Cerulli.

These revenue-sharing arrangements may cast a shadow over financial advisers' obligations to keep their clients' best interests in mind.

"Who pays us the most - who calls on (SIC) the most -who helps us the most seems to be all I ever hear about funds and their wholesalers," wrote a broker in a May 17, 2001 e-mail. "What about who makes our clients the best returns with the least risk?"

-By Arden Dale; Dow Jones Newswires; 201-938-2052; [email protected]

-By Kathy Chu; Dow Jones Newswires; 201-938-5392;

[email protected];

That can't be good.

NASD said it found that Jones held unlawful sales contests every six months. Winning brokers could choose from a list of 35 so-called "world class" vacations in locations such as Singapore, the Caribbean islands of St. Martin and Tortola, and the southwest France resort of Biarritz, with airfare and five-star accommodations.

After the firm changed the rules favoring sales of funds on the Preferred Funds list, some brokers complained that recommending non-preferred funds and variable annuities hurt their chances of winning a trip, NASD said.

I remember these nickel ass vacations....you would "win" a free trip, receive a 1099 for $5000, and pay taxes of close to $2000 for this brainwash junket.  Then, of course, you would listen to Putnam, American, and Van Krampen Ho' salers review variations of the ICA chart......sorry, didn't mean to ruin it for you new hires!  It really is still a good place to learn to sell shxt. 

Hey if anyone has anything they think may be legitimate and appropriate for the California State Attorney General to know, here's the address.

http://caag.state.ca.us/

One of the many reasons I left was because of the way the whole Putnam situation was handled.  That was the first time I realized that, "you know what, this company I work for is not as ethical as they want you to believe."

What a shame.

Hey Ex:  When did you leave?

Congrats on making the leap and leaving the dark side.

I left last May.  Went to RJA.  Never been happier.  Will be even happier when I transition to indy in a few years. It is unbelievable that what you say in your tagline is so true.  The grass was so much greener on the other side of the fence.  I’m just glad I figured that out before all this s$%t hit the fan.  I feel real bad for my friends still at Jones.  They try to put on that optimistic face, but you know it has to be tough. 

To spark a discussion ..here is a question that has been nagging at me....How do you teach a broker to sell a mutual fund without actually showing them a mutual fund?  And if you show it to them in training, doesn't it by default, become 'favored' and/or 'preferred'?   If the broker I train under sees primarily two wholesalers, am I not leaving myself open to being accused of having 'preferred' dealings with one or two companies because they were the only ones I really ever got to know?  The problem with the Edward D. Jones settlement is that it leaves us all open to litigation about how we choose our mutual funds and let's face it, most of us don't go through an entire listing each day and get to know them all and base our decisions on that. 

go_rascals, that is an interesting question.  After I left Jones 20 years ago, it took quite awhile for me to break away from the Jone's preferreds (then only 4 families).  The problem is that unless a wholesaler stumbles upon your office, he may not know you exist because the B/D controls the master list of brokers and their contact info.  You would have to call the fund company or insurance company and request to be contacted by a wholesaler.  I have done it but it is a pain. 

More importantly, most of us know that the proper asset allocation and rebalancing is far more important than market timing or even actual security selection.  The problem with Jones using Putnam Funds, for example, was that Putnam had so much overlap that you could not have done asset allocation if you would have wanted to.  I specifically remember in 2000 that their largest growth fund and their largest value fund had overlaps in 40/50 of their top holdings.

I have learned some very difficult lessons in 23 years of this business.  Some have hurt my business and some have hurt my clients.  First, never rely on your B/D for the complete story.  Second, never totally rely on your wholesaler.  Trust but verify.  Third, select fund companies that have been historically reliable to both clients and brokers.  Fourth, use asset allocation strategies and rebalance.  Fifth, you can never over-document your relationship with your client.

"If the broker I train under sees primarily two wholesalers, am I not leaving myself open to being accused of having 'preferred' dealings with one or two companies because they were the only ones I really ever got to know?"

No. There's nothing wrong with having favorites, so long as they're not your favorites because they pay you more or offer you some other special compensation.

"  The problem with the Edward D. Jones settlement is that it leaves us all open to litigation about how we choose our mutual funds..."

Nah, the fine was about kickbacks, pure and simple. You have nothing to worry about unless you're getting something similar from the funds you work with. That's my impression, at least. 

In the 12-page order, regulators also took Edward Jones to task for promoting college-savings plans offered only by the fund families that made the secret payments. These popular savings vehicles, known as 529 plans, let parents save money for college without paying taxes on investment income or withdrawals, as long as the money is used for college expenses. Investment firms manage the plans on behalf of state governments.

Edward D. Jones said it offered 14 different 529 plans, but, in fact, it sold only three, those from American Funds, Hartford Mutual Funds Inc. and Marsh & McLennan Cos.' Putnam Investments, according to people familiar with the matter. Two of those companies -- the managers of the American and Putnam funds -- made additional revenue-sharing payments so brokers would steer clients to the plans they manage, these people said.

The action against Jones represents the first on 529 plans as part of a NASD sweep of 20 brokerage firms that sell the college-saving accounts. Regulators are concerned that secret payments are leading parents into higher-cost or worse-performing options. And, in some cases, investors aren't being told that they could get state income-tax breaks in certain states, such as New York.

"Customers are entitled to have information about the best plans being offered," said Barry Goldsmith, the NASD's head of enforcement.

I like the word "secret".....the use of that word is, in the words of a drab GP, "intresting"...sell many of those Laner?

One fund family, which the SEC identified as Hartford, agreed to provide Edward Jones an equity interest of at least 5% in the distributor of its mutual funds if Jones met certain sales thresholds, the order said. That equity interest was later changed to profit participation, the order said. Hartford declined to comment on that matter.

The hefty payments represented a conflict of interest for Jones's general partners, who share in the net income of the firm, the order alleges. Some of those partners make decisions regarding which mutual-fund families get preferred status, and others recommend the preferred families to their customers, the order alleges.

Even sales representatives who haven't achieved partner status face conflicts, because their bonuses, awarded three times a year, depend in part on the "profit and loss" statements for their offices, which are increased by revenue sharing, the order said. In a January 2000 internal newsletter, a regional sales executive wrote that that selling funds that provide revenue sharing over those that don't could net a sales representative an additional $265,369 in profit, according to the order. The SEC declined to name the executive.

Prediction: If a client lost money in any of these funds in the last four years, and they want to be made whole.... all they gotta do is ask.  Just like the email scandal at Merl Lynch....arbitration time...arbitration time.

I think you may be right Jonestown.  The amazing thing is the Attorney General in California really has his act together.  More and more whistleblowers are going to surface.  There is more dirt out there and that has to be scary.  We haven't even talked about variable annuities and Jones has 3 preferred vendors here.  529 plans will be after that. 

The question is who will be the white knight?

Did I mention what at Happy Holiday this is?

Happy Holidays to you UWEC.  You were obviously an important figure in making this a special holiday season.

The AG in California is getting ready to run for Governor. He is a worshiper of Elliot Spitzer and is grandstanding. The only act he has together is his political one. He’s getting ready to waste a whole bunch of taxpayer money. He won’t consider it a waste because to him it’s free publicity. It’s a great country we live in, eh? Jones did nothing wrong. They could have gotten much more from other fund companies if they put themselves out to the highest bidder. The only reason they got whacked is because they are the ONLY firm that lets revenue sharing be credited to the brokers. Every firm has revenue sharing arrangements but Jones is the only firm that shares it.

I disagree with you.  GPs forced their will be pushing these funds, 5 of which were inferior and padded their pockets to the tune of 75% of the revenues and you call this fair?  Was the clients interest at stake?  Does it make sense now why Jones never considered managed accounts?  It all points to one thing and one thing only and that is greed.

Your are looking in the rearview mirror. Tell me which fund families will be the top performers in the next 5 years so we can tell the GP’s to include them. Also, is a managed account the best thing for the client or the broker? Now, let’s talk about greed. If Jones went to fee based account the revenue would skyrocket.

Long time lurker....first time poster

Thanks to all in this forum who were valuable therapy for me when I was at Jones.  I did leave Jones about 4 months back and it was the best decision for me.  I am glad that I had the opportunity to learn at a firm like Jones and build a book over 6 years that has allowed me to move on and make a good living.  I still have friends there and I hope that Jones doesn't "throw them under the bus."

Like someone said, the Putnam issue really opened my eyes about where I was.  I sold Putnam because my "mentor" suggested that I diversify my book away from American.  Putnam's first strike was the lack of diverisification.  Of course, we then learned about the late trading/short term trading scandals.  I NAV'd all of my clients from Putnam to another family in October of '03 and the sent in a suggestion box to inquire about why we kept them as a preferred fund family.  The firm was preaching diversification, ethics, and a conservative philosophy and Putnam seemed to be working against all of those principles.  Of course, I never saw a response to the suggestion box.  Plenty of responses in there about the IR's who made their BOA's clean the bathrooms though. :)

I was also taught about Hartford and revenue sharing by my "mentor".  He meant well for an unpaid trainer that was forced to train too many new IR's with no compensation or formal sales management training experience.  The wholesalers always danced around revenue sharing, but it came up with a wink and a nod usually at the end of the conversation.  I made captain's club for Hartford a few times and my branch profitability was helped by it.  I trusted the firm and Bachman's sermons on integrity enough to believe that if the firm said it, that it must be the right thing to do. 

Jones only asks for "Legal, ethical, and profitable" according to my former regional leader.  He once told me that I was doing fine on all counts.  I feel a little guilty now that perhaps I was missing the mark on ethical without even realizing it.

I have read a number of the articles on the settlement and see where one of the provisions will allow clients to switch out to other fund families (I assume off the preferred list) at no cost.  I feel for my friends---great guys---that are still at Jones.  Certainly there will be a Saturday broadcast explaining what a great opportunity that all of these incoming calls will be.  "Think of all the portfolio reviews and valuable face to face contacts that you can make through this folks."  My buddies will do their best and work towards partnership and trips (if they still do them) and will put on a good face for clients---and the GP's will still make their money. 

I will probably lurk for a while, but I had to get this off my chest.  I feel like I have friends on this board from the nights I spent reading the posts and getting the courage to leave the firm.  For that, I thank you.  My best to all of you---current Joneser's and former joneser's.  We all have a common thread that binds us like family.  Have a Merry Christmas!!

From looking at other posts in the Reg Rep forums, it’s obvious that old Newbie is a disgruntled former IR that was more than likely an underachiever that never became an LP or went on a diversification trip. If you did achieve these, then you were probably a compliance nightmare and were let go. Now you hang out on the internet being the pot that calls the kettle black. So sad.

"The Truth" is hurtin'

NYSENINJA

My previous post was not meant for you. It was for "The Truth"

It would be interesting to know however, if you took a check with your new firm and if your clients know how much you got. You are free to sell whatever you want at Jones, preferred or not. If you spent six years at Jones then the argument that your mentor is at fault for you selling bad funds just doesn't hold water. You are not a victim so put away the hanky.

The point was over 98% of all fund business that was done at Jones was with vendors who paid them undisclosed kickbacks for assets on the books.  Some were good funds, but many were not.  Jones recieved these kickbacks on an annual basis and they were not based upon CY sales like many revenue sharing agreements at other firms.

Yes, at Jones you could work with many families outside of the preferred...but where does the wholesaler support come from?  What fund companies are on the diversification trips paying for dinners and drinks for brokers and their spouses?  Yes, that's right the famous...or now the infamous preferred funds.  When you type in mutual funds on the VI system...what familes would show up?  Yes, the prferred funds.  Brokers had true access to very little outside the preferred group.  And the BIG SELLING point of Jones...is we don't push our own funds so there are no conflicts of interests!  LOL.  Typical of what I have come to expect from Edward Jones over the years.  Half-Truth's and outright lies. 

The $75 million is a big dollar amount for Jones to pay...but it's not nearly enough as they have bilked about 600 million since they started the "program."  They should have to pay it all back.

While

Aw man, I am an IR for EDJ. For the past few days I have felt like a deer in the headlights. For many of us, it seems that 12/20 is for EDJ as 9/11 is for the country. It will never be the same. I have lurked on this board for many months, watching, reading and taking in all of the messages regarding my firm. I think deep down, I’ve seen the truths, but never wanted to believe them.

As a broker for this firm, a few things really kill me. First of all, the response they are handing out to us is insane. “Folks, we have finally settled this nonsense and we are proud to put this behind us. But now instead of talking about that we are proud to announce that we are going to pay all IRs who signed up for the nonexistant LP offering 19% on what they would have received for LP”.

Talk about damage control. As an IR reading all of these articles as well as the SEC report, I am discovering the evil truths behind my company. The most important, 75% of net revenue goes to the approximatly 275 GPs. WTF! So I am supposed to believe that we chose these fund families because they are in the best interest of my clients? So Dodge and Cox refuses to pay us a revenue sharing, so this means that we cannot use them?

Folks understand something, as an IR for this company, I do truly believe and know that I did what was best for my clients. Yes they are in Lord Abbet, American and Hartford Funds. During the Putnam scandal, I did NAV everyone into other fund families and was extremely erked at other IRs making their months by selling them into other funds. My clients are diversified and they are holding the funds for the long term.

The problem is that I was blinded towards the opportunities of other families by the shear greed of my GPs. I have refused to jump on the credit card scheme and back in 2002, I refused to follow their lead in the contests supporting a few funds.

What kills me is the fact that I busted my hump training these loser IRs who the minute I met them, explained to my Regional Leader that these folks wouldnt make it. Their response was to keep training them, even though it is taking valuable time away from my business. Because this will strongly affect my LP offering. WTF!

Most IRs who have survived for longer than three years are usually very good people. We work very hard and really do, what we think, is best for the clients. I know that the articles are stating that these revenues are filtered down to the IR. You must understand, these GPs have devised this P&L statement, full of malarchy, which after all of the nonsense, kicks you out a bonus of $300. One of the IRs is an accountant who for years has been trying to figure the P&L out to no avail. My annual bonus equates to approximatly 4,000 dollars. This places me in the top 2000 area based on the number of IRs for the firm. So 7000 IRs are geting a bonus of less than 4000. WOW!

I am beyond upset with my company and yes, I am hitting the highway. This company is nothing but a psychological stink tank. The company will survive this, but the damage being done by these GP’s is astounding. To these GPs reading this, you have destroyed people’s lives by selling out to greed. Congrats. These emergency conference calls want to explain to me how I will be getting a 19% check on my nonexistant LP. Lets talk about what exactly is going on instead of trying to buy us out.

Great post BlindedJones IR.  I am sure that there are many others just like you who are right behind you!

nyseninja, you have hit it right on the head.  As I said in some of my older posts, those were the same reasons that I left.

megdawg, give up the fight.  There's no sense defending anymore...you've been exposed!!!

Happy Holidays.

MEGDAWG-  You have been exposed.  Let's talk about the policy Jones enforced after the Putnam scandal.  The policy read something like this:  We are still keeping Putnam as a preferred fund family at this time.  We do understand that clients may want to move out of the family due to regulatory concerns.  If so we ENCOURAGE you to move clients to NAV.  Come on MEGDAWG.  We all know those IRs in the various regions that took advantage of this and moved all Putnam holdings to American Funds and received full boat commission again.  And this has been an ongoing concern with the powers that be at Jones.  So you keep them as a preferred yet don't do anything to the brokers that moved multi millions out of Putnam and received another commission in one of your "Non Proprietary Funds". 

Instead of stepping up to the plate and making a decision, they decided to take a back seat.  What was great was these same guys one day who received the double commission were receiving "awards" in the region and then the next day when Jones was exposed they were being asked questions such as why did you not move your clients at NAV?

Well GPs I did it for the same reason you have been living and preaching......Greed.

Face it MEGDAWG your firm is unethical and will get what it deserves.  There is so much more out there if the regulators, etc every find out.

The greed of the GP's is what is really been exposed.

Blindsided.  Jones is NOT a bad place to start your career.  Things may get worse there before they better however, and if you have a large enough client base--the doorway to independence never looked better.  Best of luck.

MEGDAWG-

Once last thing on the funds.  Sure you could sell whatever fund you wanted.  But simple logic has to come into play.  If that was the case why did 98% go to preferred funds?  It is called brain washing.

Also, please keep in mind that not all of us are brokers or ever were with your firm that makes posts on here.  Just thought you might keep that tucked in your Jonesified head.

megdawg,

About sharing the Rev. Sharing...about 90-95% stays with the GP's.  Do the math...even in a 50% bonus bracket, only the last dollars count as 50% using the BS math used to calculate the bonus.  Look up the chart for paying the bonus and you'll know what I mean...I can't remember exactly how it went but I think it started out at like 2% in the first tear. 

My only regret about the story that broke on 1/9/04 is that the focus was on the broker instead of the firm.  The fact the Rev. Sing exists does not get to the broker in till they reach seg. 3.

"The Firm" lied to its brokers and its employees and all the time telling both that they were the ONLY ethical firm on the planet.  The only thing Jones is...THE MOST HIPPOCRATIC FIRM ON THE PLANET.  That is why there is some much talk about Jones and no other firms is because of the hypocrisy. 

When I left, I never got a dime from the firm I moved to and I could have...even at my level of production.  I moved into the Indy world and don't have anyone telling me or limiting me as to what I can sell my clients.  Jones is still a good place to start and part of the reason is because Jones keeps the investment options simple and limited.  The biggest adjustment I had to make with Indy is the shear volume of options. 

BTW...Jones also skims revenue off the top from all VA contracts to the tune of 50 to 100 bps.  I signed up for a 40% payout and Jones is keeping a load of cash up front...that's just wrong.

BlindedJonesIR,

Just one correction...1/9/04 was Jones' 9/11.  If you need some help moving your book...please IM me and I'll give you a blueprint.

Happy Holidays!!!!!!

EDWARD JONES: Nabbed

Friday, Dec. 24 2004

 
FROM WHERE the small investor stands, Wall Street is one, grand, multilayered
conflict of interest. Brokers and brokerage houses often get paid more for
offering other than their best advice to small investors. The government's $75
million settlement with the Edward Jones brokerage will lessen the impact of
one particular conflict among many. But the government should go further.

Edward Jones, which is based in Des Peres, employs more than 4,000 people in
St. Louis, and is generally a good corporate citizen. It preaches a
conservative buy-and-hold philosophy that serves investors better than the
hurry-up-and-buy pitch that boosts profits at other firms. So it's painful to
see the firm lower itself through acts of greed that ill-serve its customers.

Jones was nabbed for a practice nicknamed "pay for play." Big mutual fund
companies agreed to kick back money to Jones if Jones would funnel lots of
investor cash into their mutual funds. This practice is legal - and sleazy.

To get the requisite cash flowing, Jones put the favored fund companies on its
"preferred" list and sweetened the reward for brokers who sold them. At least
95 percent of Jones' fund sales went to those preferred funds.

Jones says that the firm thought those funds would serve its customers well.
Still, Jones' own profit was obviously a big motivation in pushing funds that
scratched the firm's back. In regulators' minds, Jones' sin was its failure to
disclose these back-door payments to its customers, and the agreement forces
the firm to do so.

That's right as far as it goes. But the major problem is that pay for play is
legal.

Small investors come to full-service brokers such as Edward Jones precisely
because they know little about investing and need advice. They are naifs
wandering in a land of Wall Street wolves.

Those wolves have a taste for small investors. We've seen over the past few
years how the sharp-toothed creatures in Wall Street management turned stock
analysts into shills, touting the stock of their investment banking clients to
the detriment of their small investor clients. Brokerages, annuity companies
and other players structure rewards in ways that tempt sales people to put
their own paychecks above their clients. Mutual fund kick-backs are part of
that.

Better disclosure will rescue some investors. But others, perhaps most, will
trust their brokers. Pay for play in mutual funds should be illegal.

The $75 million extracted from Jones will be used to repay its investors. But
$75 million doesn't equal Jones' profit from its improper practices. California
Attorney General Bill Lockyer says Jones reaped about $300 million since 2000,
according to the Wall Street Journal. But the company still faces a
raft of lawsuits, including one from Mr. Lockyer's office. And its carefully
built reputation - as the down-home, easy-going alternative to city-slicker
stock brokers - has taken a drubbing. By the time it's over, this misadventure
may cost Edward Jones far more than cash.

The thing you guys keep forgetting, when and if Jones bites the dust,   they will sell out to a big bank or insurance company, and these GP’s you all hold is such high esteem will all retire to Bermuda with millions of dollars and mega stock options.    The IR’s left will then be able to offer managed money and other products that have been witheld from them that make sense, so there is some validy for those IR’s that don’t want to go through the hassle of moving a book to stick it out and see what happens.    

Deaniac,

That's right "big bank" will want to purchase a firm with

1. "advanced communications system" that's not dependent on fiber optics 

2. Possible $300 Million settlement with California

3. 9 unsettled class action suits

4. highly profitable international operations(CDN and the UK)

5. decreasing sales force due to all the wonderful free publicity

Sure the GPs will make some money off the sell off, but perhaps not as much as they think their firm is worth.  Not only that, but the buyer(s) will also have to get the IRs to stay on, which I think would also impact the pricing.   

Jones will not bite the dust guys.  While I might agree that a sale is much more likely now than ever before, it still remains a slim chance.  The GP profit potential on a long term basis remains intact.   Revenue sharing will continue at Primerica, but will have to be disclosed on confirms/statements or both.

One question;

When will the same investigation start into the same practices with EDJ's annuity business?

That is a good question Starka and one would have to believe it will follow.  I would be concerned with the fact that this company settled it would open the door for other “opportunities” for regulators.  Annuities, 529 plans and lack of internal control over NAV transfers would seem to be the most logical steps in no particular order.  I think we will need to stay tuned to see.

529 plans were a part of this litigation.   (I got bored and read the settlement docs).  

First, Jones has no reason to sell.  They print cash in this business model and they will continue to do so.

The biggest impact on this firm is going to be the Chicken Little effect.  Being a past Jones IR that hires Jones IRs, I have been getting the calls from IRs telling me the sky is falling. 

When asked what is happening with customers the tell me about the two or three calls they received from supportive clients.  This is not a big deal to the public but rather a big deal to us on the inside.  And the IR that reacts based on emotion is going to make bad decisions.  If they did what was in the best interest of the client regardless of what was happening at Jones, then the client will know that. 

I worked at Jones before revenue sharing.  We had the same preffered fund families.  Then came revenue sharing and my bonus went through the roof.  Looking at my past numbers I got more than 100% of what the firm received.  So anyone that says that revenue sharing had little impact their bonus had a small book.

Do you really think that a settlement of 75 million along with pending problems in California are not going to affect the company?  Heck, what do I know, maybe you’re correct but I would think these things will create significant problems for them.  This settlement along with others are going to amount to a lot of money for a firm their size.  The wirehouses paid smaller amounts on a relative basis.  They were easily able to absorb it but I would think that if California turns out to be as much or more than the 75 mil just paid it could make it tough for them.  If only from the stand point of loosing even more IRs than they are currently loosing.     

Edward Jones is starting to bleed, Doug Hill announces he will resign as part of SEC agreement...........how many others will be leaving ?

If, you are not a GP  , You had better hit the road, the hand writing is on the wall, and it's sliding down hill (as in Doug Hill)................Fast...

When Jones announced that it was going to payoff on the LP to people that had not paid any money into it, that should have been a wake-up call, no matter how much Kool Aid you had been drinking

You can't get something for nothing .....oh maybe you can at Edward D Jones & Company

the Domino's are starting to fall.................................

Quite certain it will blow over and no, Jones won't end up selling out. 

Doug leaving?  Is that official?  Oh well.  Still won't mean much to the average joe schmoe investor in po-dunk USA who invests with the local guy who he's known since childhood.  I would be terribly surprised if any of this has much of an effect on Edward D. Jones at all.  From what I gather they are pretty over-capitalized anyway and the only ones affected were the GPs.  Most brokers I know of report that they have had almost no calls on it from their clients...more calls from other brokers than anything else. 

Player sounds like a failed Jones broker that now sells annuities from a bank branch. You're not smart enough to be an indy. Jones will survive and come out much stronger.

I am glad to see Hill go.  Not becuase I want to see Jones hurt but believe he was bad for Jones.

In the past couple of years I have not said Jones has done anything smart but how they are handling the internals on this whole things is great.  The GPs are the ones paying for it, as it should be.  And the life blood of Jones are the people that are in-line for LP or have LP.  These are the people that are profitable and are pulling the weight.  Brilliant in paying these people out.  They legally couldn't continue the offering but nothing stopping from paying them.

The only concern I have in this entire fiasco is for the honest men and women of our profession who had accepted the statements from John Bachmann and Doug Hill that theirs was THE honest firm, a lonely beacon of honor among the squalor of wire houses.  How do you think it feels going to work the next morning?

megdawg,

It appears I hit a nerve with you, stop the personal slamming, realize Jones is changed forever, and all your hoping will not change it ! 

The three of you above must be drinking the Kool Aid by the gallon, when the letters go out to the clients of Edward D Jones & Company,

the crap will hit the fan like never before, for the first time you will be on the defensive, and the rest of the Brokers will be sharing the Good News with your clients, not the Home Office.

It was interesting to read frankstrom comments, he is with Jones , and it still defending them.   Listen closely, Jones settled this close to Christmas to reduce the fallout, however California will not fall so easily.   Also, all of us X-Jonsers will pass the word, when clients find out how deceptive Jones was to try and lesson the fallout, it will be even worse, remember Water Gate, the cover-up was worse than the act, Didn't the GP's learn anything from Tricky Dick ?    I contacted 4 old Jones clients today, and informed them of the Good news, the transfer forms are in the mail, I can't wait to talk to more tomorrow...the cover-up is the worst part of it !

What is really amazing to me and it shows how far this once great Firm has fallen, is the rationalization of the three of you that everything is ok.....that speaks louder that anything you have written...doesn't it ?  

The real loosers here are the clients the are loosing faith in our entire system, isn't it ?

[quote=Player]

megdawg,

It appears I hit a nerve with you, stop the personal slamming, realize Jones is changed forever, and all your hoping will not change it ! 

[/quote]

megdawg,

If you are at Jones, then you know how much support you get from the home office where non-preferred funds are concerned.  Practically NOTHING!  The proprietary system that you use every day revolves around those 7 preferred fund families.  Suppose a client is interested in a good emerging markets fund.  Do you have an easy way to research the best funds available?  No, but you can call STL and they can easily look it up on THEIR system.  You are forced to call STL everytime you need anything related to a non-preferred fund, or you can research it on your own.  How many IR's are going to take the time and trouble to look at non-preferred funds?  How many have the time?  Just their systems or lack thereof point to a conflict of interest.

Also, since the company doesn't carry E&O insurance, what would happen if the IR recommended a non-preferred fund that later lost money resulting in a client complaint for compensation?  Would EDJ stand behind the IR and pay up, or would they step back and leave him holding the bag?

BTW- while I was an IR, I got a wire from the home office concerning 529 plans.  Some IR's in my state wanted to sell our state's 529 plan (non-preferred funds) so that the client could get a state income tax break for the contribution.  A wire came through from the home office saying that we could sell our state's plan but would get no support from STL.  We were on our own.

megdawg, you are kidding yourself if you think that EDJ is an innocent victim in all of this.  They have made it very difficult for an IR to sell anything except those preferred funds.

Well, the dust is finally starting to settle. And there is still smoke bellowing out of St Louis. The other day we had a conference call with our region. The main topic, the LP offering, not that we should be discussing anything else.

It is amazing how your life can be spun around so completly in such a short period of time. It makes me very upset to the fact that the GPs were working for their best interest and not my clients. When those letters go out, my clients will be looking to me for answers. I will be the shmuck, not Doug Hill or the other 300 GPs. This is a game of trust, when my clients question my trust, things are not good. My clients will be questionning this trust in January when they all recieve that magical letter.

Enjoy your Christmas Doug and thanks for the memories. Oh and dont let the door hit you on the way out.

Doug was such a prick. 

He had to pay 3 million himself!  That's 6 months pay. 

Edward Jones 's
Top Executive
To Step Down<?:namespace prefix = o ns = "urn:schemas-microsoft-com:office:office" />

By JOHN HECHINGER and SUSANNE CRAIG
Staff Reporters of THE <?:namespace prefix = st1 ns = "urn:schemas-microsoft-com:office:smarttags" />WALL STREET JOURNAL
December 28, 2004; Page C1

Edward D. Jones & Co.'s top executive plans to give up his post next year in the wake of a settlement with federal regulators over the tens of millions of dollars in undisclosed fees the brokerage firm received from mutual-fund companies to sell their wares.

The stepping aside of Doug Hill, Jones's managing general partner, was disclosed in a Securities and Exchange Commission filing.

The move is a blow to the St. Louis-based firm, which prides itself on its squeaky clean, even folksy reputation. Last week the company agreed to pay $75 million to settle the regulatory allegations from the SEC, the National Association of Securities Dealers and New York Stock Exchange's regulatory division.

That agreement represented the largest regulatory settlement to date from a brokerage firm involving revenue sharing, an industry practice in which mutual funds pay brokerage firms to encourage them to push their product.

Edward D. Jones, which is a private partnership, also disclosed that Mr. Hill personally agreed to pay $3 million -- a "disproportionate share" of the $75 million penalty. Regulators have said the money would be distributed to investors. As a group, the general partners, including Mr. Hill, will pony up $44 million, carrying a far bigger load than the firm's limited partners, who include many brokers working in store offices across the country.

Last week, the U.S. Attorney's office for the Eastern District of Missouri, which had also been investigating Jones's revenue-sharing agreement, disclosed it had agreed not to prosecute the firm if Jones met certain conditions over the next two years, including paying the $75 million penalty and allowing customers to switch funds free of charge.

Yesterday, Jones said the agreement with the Justice Department also triggered Mr. Hill's departure as managing partner.

The filing said Mr. Hill had agreed to "voluntarily retire." The Justice Department agreement, which Jones filed yesterday, calls for a "reconstituted" executive committee.

Mr. Hill, 60 years old, will stay on as managing partner until the end of 2005, and will continue as a partner after that, according to a memo Mr. Hill sent to staff yesterday. "I agreed to this condition to clear the way for a settlement of these issues so all of us can put the dispute behind us and focus on helping our clients meet their long-term financial needs," he wrote.

Mr. Hill was named managing general partner last year and started the job in January. He took over from long-term Jones executive John Bachmann, who is credited with building the firm into a force to be reckoned with. In recent months, as the revenue-sharing scandal gripped the firm, there has been pressure on Mr. Bachmann to return, according to people familiar with the matter. However, the company requires managing general partners step down at age 65, the age Mr. Bachmann retired at, so any hopes of a return may be wishful thinking.

The firm said it plans to set up a succession committee to find a successor for Mr. Hill. Mr. Bachmann didn't return calls for comment yesterday. Mr. Hill declined through a spokeswoman to comment.

Mr. Hill now becomes one of the highest-profile casualties in the mutual-fund scandal, which has ended the careers of a number of senior executives in the fund world. He is the first head of a major Wall Street firm to step aside.

In recent years, Wall Street has been under siege by regulators who have been examining a broad range of conflicts of interests, such as tainted stock research and secret incentives between mutual funds and brokers. Mr. Hill's move shows just how far reaching the probe is. Edward Jones has long held itself out as an alternative to the conflict-ridden firms, and even took out advertisements to that effect.

Jones has nearly 10,000 sales offices nationwide, making it the largest network of brokerage outlets in the U.S. Its revenue-sharing practices were the subject of a page-one Wall Street Journal story in January 2004.

At Edward Jones , brokers were awarded points that they could apply towards stays at posh European and Caribbean resorts for selling customers mutual funds from firms that were making secret payments.

Meanwhile, the SEC filing and the memo to employees also says that two general partners are leaving the firm, human-resources chief Michael Holmes and Darryl Pope, another general partner. These departures aren't related to the regulatory settlement, the firm said. Messrs. Holmes and Pope couldn't be reached to comment.

Write to John Hechinger at [email protected] and Susanne Craig at [email protected]

'Monday, Jones said the agreement with the Justice Department also triggered Mr. Hill’s departure as managing partner.

The filing said Mr. Hill had agreed to "voluntarily retire."

The Justice Department agreement, which Jones filed Monday, calls for a "reconstituted" executive committee. '

Everyone should understand Mr. Hill's use of the word "voluntarily" is capricious at best.  Without the spin, he is volunteering to step down to satisfy as one of the demands by the Justice Department in order that Jones avoids prosecution. 

Today's Scandal......

Regulators Find
Problem Trading
At Edward Jones

By SUSANNE CRAIG and JOHN HECHINGER
Staff Reporters of THE WALL STREET JOURNAL
December 29, 2004; Page C1

In late 2003, St. Louis brokerage house Edward D. Jones & Co. took out advertisements in newspapers across the country, shaking its finger at the "anything goes" approach that led to abuses in the mutual-fund industry. Now, the company has acknowledged to the Justice Department that it failed to disclose mutual-fund sales practices that led to a $75 million penalty from regulators and a shake-up in its executive suite.

In a Securities and Exchange Commission filing late Monday, Jones also disclosed that regulators had found thousands of instances of the firm's improperly allowing mutual-fund trades made after 4 p.m. Eastern time to receive that day's price. The practice, called late trading, is considered one of the more clear-cut and egregious abuses of the mutual-fund scandal because it can allow favored clients to skim profits from long-term investors.

Regulators didn't identify any specific instances of abusive late trading, but said Jones didn't have the proper systems in place to prevent "any unlawful late trading that may have existed." Jones settled these allegations without admitting or denying them.

The firm, which operates the largest network of retail brokerage offices in the U.S., also disclosed in the SEC filing that Doug Hill, its managing general partner, who signed the ad, is stepping down at the end of 2005 in the wake of a settlement with federal regulators over the tens of millions of dollars in undisclosed fees the firm received from mutual-fund companies to push their products.

A spokeswoman for Jones declined to comment on the filing. Yesterday, Mr. Hill's lawyer said that his client, who declined to comment, was committed to restoring the firm's image. He added that Jones never considered what it was doing to be questionable.

Federal regulators say Jones improperly encouraged its brokers to steer customers toward seven "preferred" mutual-fund companies that secretly paid the brokerage house. That practice, common in the industry, is called "revenue sharing." Jones' revenue-sharing practices were the subject of a page-one Wall Street Journal article in January 2004. Historically, 95% to 98% of Jones sales of mutual funds have been from these funds, regulators found.

Regulators believe undisclosed payments may have hurt clients because brokers had an incentive to put them into inferior or inappropriate products just to get the incentives, which included trips, with an average value of $5,000, to destinations such as Davos, Switzerland, and the British Virgin Islands. Some brokers were provided $1,000 cash for one trip billed as a "shopping spree."

The filing by Jones, a private partnership, included a laundry list of other infractions, including findings that the firm failed to preserve e-mails for at least two years as required by regulators. The filing also included the firm's agreement with the U.S. attorney's office for the Eastern District of Missouri, which had been conducting a criminal investigation of Jones and found that the firm gave inaccurate statements to the SEC in response to a so-called Wells notice. Wells notices warn that regulators may file civil charges and give firms a chance to defend themselves. As part of the agreement with the U.S. attorney, Jones acknowledged making inaccurate statements.

The documents didn't spell out those statements, but people familiar with the matter say U.S. Attorney James Martin's office took exception to Jones's vigorous defense of its revenue-sharing agreements in its Wells response. The spokeswoman for Jones declined to comment, as did Mr. Martin.

The U.S. attorney agreed he wouldn't prosecute if Jones meets certain requirements over the next two years, including paying the regulatory penalty and letting customers who own preferred funds switch to other funds free of charge.

In its settlements with the SEC, the National Association of Securities Dealers and the New York Stock Exchange, Jones neither admitted nor denied wrongdoing. Jones still faces a lawsuit by California Attorney General Bill Lockyer, who has called the regulatory settlement inadequate, given what he said were $300 million in undisclosed payments from funds since January 2000. Jones has said it will vigorously defend itself against that suit.

But in its settlement with the Justice Department, Jones acknowledged it sometimes encouraged its brokers to consider revenue sharing in advising investors on which funds to buy, among other admissions. Meanwhile, the NASD and the NYSE said Jones also failed to have policies to prevent customers from sending an order to buy mutual-fund shares after 4 p.m. and receiving a pre-4 p.m. price. Securities rules mandate orders received after 4 p.m. get the next day's price.

Investors who send in orders late but get the earlier price can exploit late, market-moving information, such as a positive announcement after 4 p.m. from a company that is a big holding in a mutual fund. Those investors can buy shares in the fund and sell the next day, reaping a profit that should belong to long-term shareholders. New York state's attorney general, Eliot Spitzer, who brought late trading to light in the fall of 2003, likened it to betting on a horse race after it was over.

Before November 2003, Jones let its brokers call its service department between 4:01 p.m. and 4:45 p.m. Eastern time and request a mutual-fund trade be allocated to that day's price, according to agreements with the NASD and NYSE contained in the new regulatory filing. To do so, brokers had to certify they received the trade from the customer before 4 p.m., the NASD and NYSE said. Jones called such requests "released trades" and let brokers, after the 4 p.m. cutoff, change amounts of trades and the names of funds bought, regulators said.

Between May 2003 and November 2003, Jones identified 8,700 instances where orders were entered, changed or cancelled after 4 p.m., and the execution price was based on that day's closing price, according to the filing.

The findings are a blow to Jones, which for years has managed to avoid any major run-ins with regulators. Jones' network of approximately 10,000 brokers caters primarily to the so-called buy and hold investor, who invests for the long term. It prides itself on its low-key, folksy image. Jones brokers often go door-to-door to recruit new clients. Many brokers hand out roses to their female clients on Valentines Day. "Investors are entitled to transparency," Mr. Hill and former Managing General Partner John Bachmann wrote in 2003 in a letter to the SEC that became the centerpiece of the firm's ad. "They should know what they are paying, and what we, as the broker, are receiving."

Mr. Hill, 60 years old, will step down as managing general partner at the end of 2005 as part of the agreement with the Justice Department and will remain a partner, a memo he sent to staff Monday. Jones also disclosed that Mr. Hill personally agreed to pay $3 million -- a "disproportionate share" of the $75 million penalty. Regulators have said the money would be distributed to investors. As a group, the general partners, including Mr. Hill, will pony up $44 million, carrying a far bigger load than the firm's limited partners, who include many brokers working in store offices across the country.

Deal explains brokerage exec's fate<?:namespace prefix = o ns = "urn:schemas-microsoft-com:office:office" />

By Jack Naudi

Of the Post-Dispatch

12/28/2004

Tucked in the middle of a nine-page agreement between Edward Jones and U.S. Attorney Jim Martin is language that in part helps explain the departure of Douglas Hill as Jones' top executive.

The Des Peres-based brokerage announced Monday that Hill will give up his position as managing partner on Dec. 31 of next year.

The announcement came less than a week after the Securities and Exchange Commission penalized Jones $75 million for failing to disclose to investors that seven mutual fund companies paid to get on its "preferred" list.

The agreement between Edward Jones and Martin, announced Dec. 20, requires the firm to hire an "independent employee" who'll work to keep it out of trouble.

That person will report to a "reconstituted executive committee," according to the agreement.

Hill is one of six people on the firm's executive committee, which helps set Jones's policies.

Martin and Edward Jones sources say the makeup of the committee has yet to be determined, but Martin said members must be free of conflicts. That excludes Hill, who's tied closely to the mutual fund problems.

On Monday, Edward Jones said two other members of the executive committee - the youngest and the oldest members - will leave the firm on Friday. But Jones said both are leaving for reasons unrelated to the mutual fund problems.

Darryl Pope, one of 275 general partners, is 65, the company's mandatory retirement age for partners.

Michael Holmes, 46, who headed the firm's human-resources department, will "pursue his interests in providing consulting services to not-for-profit institutions," the company said.

Neither man would comment.

The retirements of Holmes and Pope were announced internally at least a month ago, said an Edward Jones spokeswoman.

"There was nothing unusual," said Mary Beth Heying of Edward Jones. "We have partners who retire all the time. ... There is no connection to those (mutual fund) events."

Of more urgency to many investors are other components of Edward Jones' agreement with the <?:namespace prefix = st1 ns = "urn:schemas-microsoft-com:office:smarttags" />U.S. attorney. One allows customers to move from one of the seven preferred mutual fund families to any other fund without paying commissions and fees.

Edward Jones will contact customers in writing about the plan, Heying said. Once customers receive the notice, they'll have 90 days to make the switch.

Heying also said that on Jan. 6, Edward Jones will comply with another sanction imposed by the U.S. attorney and the SEC. On that date, the brokerage will fully disclose its mutual fund arrangements on its Web site, including the level of payments received from the seven preferred companies.

The California attorney general, who last week filed suit against Edward Jones over the mutual fund matter, pegged the total payments at $300 million. In a filing with the SEC, the firm said it received $89.9 million in 2003 and $85.9 million in 2002.

Finally, Edward Jones has until March 22 to devise an acceptable plan to distribute the $75 million required by the SEC. According to the SEC settlement, the funds will be paid to Edward Jones investors.

<SPAN =smBig>

Regulators Find Trading Abuses at Edward Jones
Smartmoney.com

In late 2003, St. Louis brokerage house Edward D. Jones & Co. took out advertisements in newspapers across the country, shaking its finger at the "anything goes" approach that led to abuses in the mutual-fund industry. Now, the company has acknowledged to the Justice Department that it failed to disclose mutual-fund sales practices that led to a $75 million penalty from regulators and a shake-up in its executive suite, Wednesday's Wall Street Journal reported.

In a Securities and Exchange Commission filing late Monday, Jones also disclosed that regulators had found thousands of instances of the firm's improperly allowing mutual-fund trades made after 4 p.m. Eastern time to receive that day's price. The practice, called late trading, is considered one of the more clear-cut and egregious abuses of the mutual-fund scandal because it can allow favored clients to skim profits from long-term investors.

Regulators didn't identify any specific instances of abusive late trading, but said Jones didn't have the proper systems in place to prevent "any unlawful late trading that may have existed." Jones settled these allegations without admitting or denying them.

The firm, which operates the largest network of retail brokerage offices in the U.S., also disclosed in the SEC filing that Doug Hill, its managing general partner, who signed the ad, is stepping down at the end of 2005 in the wake of a settlement with federal regulators over the tens of millions of dollars in undisclosed fees the firm received from mutual-fund companies to push their products.

A spokeswoman for Jones declined to comment on the filing. Tuesday, Mr. Hill's lawyer said that his client, who declined to comment, was committed to restoring the firm's image. He added that Jones never considered what it was doing to be questionable.

Federal regulators say Jones improperly encouraged its brokers to steer customers toward seven "preferred" mutual-fund companies that secretly paid the brokerage house. That practice, common in the industry, is called "revenue sharing." Jones' revenue-sharing practices were the subject of a page-one Wall Street Journal article in January 2004. Historically, 95% to 98% of Jones sales of mutual funds have been from these funds, regulators found.

Wall Street Journal Staff Reporters Susanne Craig and John Hechinger contributed to this report.

(END) Dow Jones Newswires

WHAT LEVEL OF EGREGIOUS BEHAVIOR MUST EXIST TO INCITE THE SEC AND JUSTICE DEPARTMENT TO DEMAND REMOVAL OF A COMPANY'S LEADERSHIP??

ANSWER: WHEN THE NATURE OF THAT LEADERSHIP IS CLEARLY IN CONFLICT WITH THE PUBLIC INTEREST. 

In the days to follow, when other firms are being fined, keep this in mind:  When it becomes easy to claim this is happening to everyone, ask why it was Edward Jones that was required to have it's Managing Partner step down, AND its "Executive Committee Re-constituted".

Illuminat / Zacko / other former ex-Jones IR's,

You cannot possibly imagine the amount of brainwashing going on within EDJ.  The average IR I know is incensed at the gall of the WSJ and Post Dispatch printing such nonsense.  "It is legal, it will pass, it's all good, not to worry".  Been here eight years.  What gives?  Are they brainwashed or playing it close to the vest?

You might be an idiot if.......

You became a General Partner in the last 5 years..... what an honor, and you paid to get it! I guess opening those offices in your town, hiring your future competition, giving away your clients, looks pretty stupid right now.....hope you didn't get divorced too! 

I wonder how much a RL will have to pay of the fine if he just got his $125k of GP in the last year or year and a half?

Hey where's that weasel that claimed these investigations by the SEC were going to be dropped .... yeah right   

Edward Jones' sales contest irked regulators
Insufficient supervision to combat late fund trades also cited

"The NASD has brought a number of actions in the mutual fund area, and this action is a continuation of this focus," Katherine Malfa, vice president of enforcement at NASD, said Wednesday.

On Dec. 22, brokerage Edward Jones reached final settlements with the Securities and Exchange Commission, the NASD and the New York Stock Exchange tied to charges that it failed to adequately disclose revenue-sharing payments it received from mutual fund families and 529 savings plans, also known as college savings plans, it recommended to customers.

The NASD and the NYSE, which are self-regulatory organizations, also charged the firm with violating their rules by lacking adequate supervisory practices to combat late trading, Malfa said in a telephone interview.

Both organizations also charged Edward Jones with failure to retain emails, she said. In addition, the NASD brought charges for conducting the illegal sales contest and for violating one of its rules that prohibits firms from favoring the sale of specific funds in return for brokerage commissions, Malfa said.

Edward Jones agreed to the settlement without admitting or denying guilt. In a regulatory filing on Monday, the St. Louis, Mo.-based firm also said Douglas Hill, managing general partner, had agreed to retire voluntarily at the end of 2005.

Late trading, which is illegal, occurs when people are allowed to buy mutual fund shares at the current day's net asset value after the 4 p.m. EST close of trading. Federal securities laws require mutual fund transactions received after 4 p.m. to be given the next day's NAV. In late trading, traders may seek to profit from market events occurring after 4 p.m. that aren't reflected in that day's price.

Edward Jones said in the filing that prior to Nov. 30, 2003, between 4:01 p.m. and 4:45 p.m., the firm allowed investment representatives to call the Service Division at its headquarters to request that a trade entered after 4 p.m. be "released" and given the same day's NAV. Between May and November 2003, the firm identified about 8,700 instances where an order was entered, changed or cancelled after 4 p.m. and given that day's NAV.

Typically, the only question the service representative posed to the investment rep was whether the order was received prior to 4 p.m. Once the rep answered yes, the trade was released at that day's NAV, the filing said.

The NASD found that in those instances, the firm didn't have policies or procedures in place to verify that customers actually placed those orders before the 4 p.m. close, Malfa said.

In addition to "released" trades, the firm also permitted trade corrections, the filing said. If a trade entered into the firm's computer system before 4 p.m. had administrative errors, an investment rep was allowed to correct it after the fact, changing among other things the quantity and fund name of the trade without prior supervisory approval. The corrections, however, were listed on reports to supervisors, the filing said.

The NASD said its charge concerning the unlawful sales contest relates to a contest held in Fall 2002. Winning brokers could pick from 35 vacation spots such as Singapore, St. Martin, Davos, Biarritz and Tortola. The contests, held every six months, rewarded winners with airfare and five-star accommodations, as well as with activities such as skiing and golfing.

In October 2002, Edward Jones altered the rules, only crediting sales of fund shares from its preferred list. That violated NASD rules which prohibit product-specific sales contests that credit the sale of some, but not all, fund sales. According to an NASD release issued last week, some brokers complained that "doing the right thing" for clients by recommending non-preferred funds and variable annuities hurt their chance to earn a sales contest trip.

Edward Jones spokeswoman Katie Schonaerts said the firm had no comment beyond the filing.

[quote=LA,P-ALL]

Illuminat / Zacko / other former ex-Jones IR's,

You cannot possibly imagine the amount of brainwashing going on within EDJ.  The average IR I know is incensed at the gall of the WSJ and Post Dispatch printing such nonsense.  "It is legal, it will pass, it's all good, not to worry".  Been here eight years.  What gives?  Are they brainwashed or playing it close to the vest?

[/quote]

'Playing it close to the vest' would suggest that "they have other cards to play yet".  I would suspect that not only are there no other useful cards to play, but that they (Jones) are not even sure which game they are playing.

The S.O.P., by default, will include running the propoganda machine. The "brainwashing" TODAY is just music to calm the masses:

The music was cheerful and gay. The selections were mostly ragtime and gave the impression to the passengers on deck that all was under control, there was no need to panic. Many of the survivors expressed their gratitude to the Titanic band for helping to maintain an air of decorum during the scramble for the lifeboats. Others have criticized the band for playing. Some felt that having the band on deck gave people a false impression that things weren't that bad and it caused many to take the situation lightly, thus preventing many from entering the life boats. This argument is left to conjecture, but what is known is that the band's music did help to soothe the passengers and most likely prevented panic as the last of the boats were leaving.

At 2:00 A.M. the last boat, Collapsible D, left the ship. It was now 2:05 A.M. more than 1,500 people were still aboard. The Titanic sank lower and lower at the bow, and stern began to rise out of the water. There was little time now. The band continued to play. The deck became so steep that bandmaster Hartley released the musicians from duty. Alone, he began the first notes of a simple hymn. One by one the bandsmen, choosing not to leave joined in. It was the last song the band would play and the last song survivors heard before the boat broke into two pieces. Minutes later the entire band was washed away by a sudden wave as the Titanic made it's last plunge.

Edward Jones IR's are in shock

I heard from an old IR friend in California, he said their phones are ringing off the hook, clients wanting to know when and how they can get their money back on their lousy Mutual Funds The calls are non stop !

But the brainwashing is really going on to the extreme, I talked to another IR that told me " here is no way California is going to cost Jones a penny " I asked him if the same GP that told him the SEC would never fine Jones for doing the right thing, oh, he's the one that got fined 3 Million and had to resign........................ 

It is really amazing how intelligent people can be duped over and over............That Kool Aid must be getting stronger than ever

Being an IR at Jones, for the moment, it is indeed a very strange time. For the record, I have been with Jones for 8 years and I am finishing up the year at the 300K level. When I started with Jones, I came out swinging. My numbers were way above the standard and I was praised by my peers (cherry flavored). It was an honor to be asked to mentor new IRs (grape) or to lead the call out sessions (lemonade), or to become the growth leader (Fruit Punch) and to become the New Hire Specialist (Berry). I did all of this for free and my business suffered.



Today, there are two distinctive camps. The “I cant believe they can do this to us” camp and the other “I can’t believe they can do this camp”. They being, the GPs and the other being the Press.



Today, my Kool Aid cup is empty and as I look around, I have nothing to show for it. My book is not mine and I am constantly monitering the news before work in order to see what traps lie awaiting me prior to arriving at work.



I am not getting many calls…yet. The ones who are calling are feeling bad for me for working for such scoundrels. Greed is a terrible thing. It tends to lead to unethical behavior.



So if you are in the “Jones is the best place to be camp”, please hand me a new cup of Kool Aid. I may not drink it, but at this point, we are picking up camp and closing this chapter.



You have three months to change my mind.



“Honey, get the kids clothes on, we’re getting ready to leave.”

Thought I would take a look at the Edward Jones website to see if there was any mention of their current travails.  No mention, but it was enlightening to read.  For example:

1.  Under the "How Others See Us" tab there is copious recitation of media citations about the nice things said about Jones.  No mention about what the SEC, NYSE, NASD, California AG or the thousands of mislead clients had to say.

2.  Under "Comprehensive Resources" the following is stated.  "We offer the broadest selection of high-quality stocks, bonds, mutual funds, CDs, insurance/annuities..."  The word offer should be changed to "we can get you if you really, really demand".

3.  Under "A Commitment to Quality" I learned that in 1987 Edward Jones established an Investment Policy Advisory Committee made up of 15 "experts".  The Co-Chairman of this Committee is Anthony Kreisel, Former Managing Director of Putnam Funds. Enough said!!!!

4.  Finally, there is a tab titled "In The News".  There was not a single mention of any problems or potential problems.  I guess the webmaster doesn't subscribe to the Wall Stree Journal, Forbes, Investors Business Daily, the St. Louis Post Dispatch or any of the other financial publications that have been exposing Jones.  I believe this omission should be construed as failure to provide full and fair disclosure.

Bottom Line.  Edward Jones has learned nothing from this.  The fine was too inconsequential to get their attention.  They are viewing this as a short-term public relations problem that will go away, allowing the GPs to return to some new scheme for fleecing investors. 

For the clones and drones that are too young to remember the past, allow me to recite for you the hit parade of investment failures that Jones swept under the rug in the early 80s:

1.  Petro Lewis

2.  Gambles Skogmo

3.  NRM

4.  EMC

5.  Famland

6. University SPDA

7. Winchester Oil

8.  McNeil Real Estate

9.  Angeles Real Estate

These were very real, catastrophic losses to conservative clients that merely represented a speed bump to the GPs.  Let's hope that the California AG and the pending class action suits bring a real aspect of justice to Jones.

The California AG will have a very small effect.  He keeps using national numbers to tell a local audience about a CA settlement.  Let's assume that his 300 million figure is right.  Let's even go so far as to assume that 5 percent of that were in the state of California.  That would only be 15 million tops, and quite frankly it is doubtful they will get that much.  (The 5 percent figure is probably exaggerated as I think Jones is not as big a presence in California.)

So the most damages they could claim would be 15 million and in settlement talks, that will probably dip to 5 million. 

Sure, other states could follow suit, but I seriously doubt they will once they see how little the money will be for CA.

not1,

review the following and then comment

http://www.hoovers.com/jones-financial-companies/--ID__40868 ,ipage__3164579--/free-co-secoutline.xhtml

Phuck 'em.  Who cares what happens to Edward Jones?

"I just finished my eighth year at Jones at 300k gross." "My business suffers because I do everything." You're an underachiever. Perhaps if you stayed off internet chat rooms and worked the Tuesday Night Promo's you wouldn't be so bitter about your low production.

You people on this chat room are obviously frustrated at not making it at Jones. They aren't for everybody and the proof is in this forum.

I drink the Kool-Aid every day. It tastes great and I will be taking a large amount of it with me on the diversification trip to the exotic island Turks & Caicos paid for by Edward Jones.

Aloha, baby!!!

Anybody heard when EJ clients are going to be able to switch funds at NAV?

I know some EDJ clients that want to transfer to me, but maybe they should hold off and do the switch before transferring over

[quote=xej1984]

not1,

review the following and then comment

http://www.hoovers.com/jones-financial-companies/--ID__40868 ,ipage__3164579--/free-co-secoutline.xhtml

[/quote]

"He (the Director of Mutual Funds Marketing) also represented to the IRs that Edward Jones directly passes the revenue sharing income along to the "IRs who did the work to get the money in the first place."

It sounds like revenue sharing income was being passed down to the worker bees.  I don't think so!  In III.8, the breakdown shows revenue sharing only going to partners.

[quote=megdawg]

They aren't for everybody and the proof is in this forum.

[/quote]

megdawg,

You are right.  EDJ wasn't for me, for all of the reasons outlined in the SEC ruling.

Learn to read Elliemae. If you worked at Jones you will know that revenue sharing is credited to the P&L. Seperate your emotions and get it straight. You’re sounding like another underachieving former IR that didn’t make it.  

Elliemae. That’s a cop out. You failed, plain and simple.

[quote=megdawg]Elliemae. That's a cop out. You failed, plain and simple.[/quote]

The hubris of the ignorant.

Congratulations, mega!

No Starka. The facts from the one who knows.

[quote=megdawg]No Starka. The facts from the one who knows.[/quote]

Your firm is the laughingstock of the industry meg and so, apparently, are you.

Starka. Your reply is typical from someone that is uninformed and knows it. How sad.

[quote=megdawg]Elliemae. That's a cop out. You failed, plain and simple.[/quote]

Hey meg,

Maybe you know the answer to my previous question:

Anybody heard when EJ clients are going to be able to switch funds at NAV?

I know some EDJ clients that want to transfer to me, but maybe they should hold off and do the switch before transferring over

Can they do the switch now, so I can go ahead and get those accounts moved 

[quote=megdawg]

Starka. Your reply is typical from someone that is uninformed and knows it. How sad.

Meg, save your tears for someone who cares.

Elliemae,

I seriously doubt that Jones clients want to move to you. Further proof that you didn't actually read the statement is in your previous post. Read the settlement.

Starka, your intellect is overwhelming.

[quote=megdawg]Starka, your intellect is overwhelming. [/quote]

To another intellectual, it is. 

[quote=megdawg]

Elliemae,

I seriously doubt that Jones clients want to move to you. Further proof that you didn't actually read the statement is in your previous post. Read the settlement.

[/quote]

Please read:

 DEFERRED CONSIDERATION AGREEMENT

         On December 20, 2004, Edward Jones entered into a Deferred
Consideration Agreement (a copy of which is attached as Exhibit 99.4, and
which is incorporated herein by reference) with the United States Attorney's
Office for the Eastern District of Missouri ("Office"). Pursuant to the
Deferred Consideration Agreement Edward Jones has agreed, in addition to the
SEC administrative order, the NASD Letter of Acceptance, Waiver and Consent,
and the NYSE Stipulation of Facts and Consent to Penalty described above
(collectively, the "Order and Agreements"), to offer its customers holding
shares in Preferred Funds (as described in the Deferred Consideration
Agreement) for a period of ninety (90) days, the opportunity to sell such
holdings without the payment of certain fees by selling the customer's
interest in the Preferred Funds, at net asset value, to purchase shares of
mutual funds in another Preferred Fund or any other mutual fund with which
Edward Jones has a selling agreement ("Switch Funds"). For this purpose,
commissions typically paid to Edward Jones and the Switch Funds will be
waived by Edward Jones and the Switch Funds or Edward Jones will pass
through the commissions received by Edward Jones and the Switch Funds back
to the customer. Edward Jones further agreed to allocate responsibility for
the payment of the amount due under the Order and Agreements among the
registrant's partners (except registrant's limited partners), in a manner
satisfactory to the Office, and to reimburse the United States Postal
Service for its investigation costs and expenses in the amount of $200,000
as directed by the Office.

You can find that here:

http://www.hoovers.com/free/co/secdoc.xhtml?ipage=3164579&am p;doc=0&attach=on

[quote=xej1984]

xej

Show me what was illegal? Where do you work now? Give me an example of a client that bought American Funds from me in the last 10 years got hurt. Read the article in yesterday's St. Louis Post-Dispatch and broaden your horizons. The article above is old news.

I'd like to get those folks into Am Funds at no cost before I steal their accounts.

Steal the accounts, Ellie?  You’re doing the poor bastards a favor.

[quote=megdawg]

xej

Show me what was illegal? Where do you work now? Give me an example of a client that bought American Funds from me in the last 10 years got hurt. Read the article in yesterday's St. Louis Post-Dispatch and broaden your horizons. The article above is old news.

[/quote]

Failure to disclose is a violation.  Or didn't they tell you that?

[quote=Starka]Steal the accounts, Ellie?  You're doing the poor bastards a favor.[/quote]

I'd like to get some of those EDJ clients into Am Funds at no cost before I do them a favor and steal their accounts from EDJ. 

Elliemae: “Steal”  What a revealing word that more than likely describes your business practices. You probably need all the accounts you can get since a good number of your accounts saw you for what you are and went back to Jones.

Starka, where do you work now?

Seven Eleven.  Why?

As a HQ associate with the firm for 10+ years it boils down to this - Edward Jones is run just like all the other big boys. Those that run EJ are in business to make money for themselves plain and simple. How much power and wealth can be accumulated? There’s been scandals through the industry and if your firm has come through clean, it just means you’re next. Did EJ screw-up? You betcha. Does it look bad? Yup.



I ask, rhetorically:

Has your firm ALWAYS disclosed EVERYTHING related to fund revenue sharing? Have you ALWAYS given your clients the appropriate disclosures EVERYTIME (or were you more focused on the sale)? You’re firm NEVER late traded mutual funds? You’d better hope so. (sorry I don’t go into the fine details of the filing, so please don’t direct me to read it - been there, done that). The point is at some point the regulators will find something if they’re looking hard enough.   



I do find it interesting that the those on the forum talking about EJ’s ‘untimely’ demise. Honestly, I don’t believe that you know enough of the firm’s finances to make those statements. Jones isn’t going anywhere unless the GPs can make a killing (more than they do today) or Doug’s attorney continues to make statements to the press about this mess. I find the comments about the regulators not liking the EJ single office structure with remote surveillance amusing. The firm did not get busted due to broker misconduct. It was the leadership decision making that got us in hot water.   



I don’t post here to defend EJ. However, this long time koolaid drinker is taking a dose of reality peppered with cynisism from now on.



I’ll close with a link to an editoral from Bill McClelland of the Stl Post Distpatch.

http://www.stltoday.com/stltoday/news/columnists.nsf/billmcc lellan/story/65F54D3309B05AD786256F790037B628?OpenDocument&H eadline=Edward+Jones+case+shows+right,+wrong+aren’t+black,+w hite



Joedog

megdawg,

looking to change firms in the middle of your self rightous tirade?

[quote=megdawg]Elliemae: "Steal"  What a revealing word that more than likely describes your business practices. You probably need all the accounts you can get since a good number of your accounts saw you for what you are and went back to Jones.[/quote]

meg-

You haven't been reading the posts.  I just recently went indy.  The clients that are moving to me haven't had time to see my dark side   I'm in the process of lifting accounts from my old EDJ office, but before I go any farther, I would like to know when those switch letters have to go out.  Do you know? 

Also, it sounds like the partners are going to be required to foot the bill for the switch.  Care to guess what those commissions are going to cost them?

[quote=joedog]

I do find it interesting that the those on the forum talking about EJ's 'untimely' demise. Honestly, I don't believe that you know enough of the firm's finances to make those statements. Jones isn't going anywhere unless the GPs can make a killing (more than they do today) or Doug's attorney continues to make statements to the press about this mess.

[/quote]

Joedog-

Care to guess how much it is going to cost the partners to comply with the order to allow clients to switch funds at no cost?

Are you asking because you don’t know and want me to tell you?



Joedog

JOEDOG-

Let me give you some help.  Before you comment on anthing that is going on, please go work for another firm and it will help shape any future comments you make.  All you are reciting is the company line and you have to realize that your bosses are greedy croooks.  Plain and simple.  It is obvious you don't know much about this industry when you talk about the "Finances" at Jones.  Your company is a small fish in a very large pond and that pond will be shrinking in the near future.  Can they survive?  Economies of scale indicate they cannot.

Truth,

You’re comments are off-base. First, I’ll claim am I not an expert in the investment industry. However, being involved in the industry for about a dozen years, interacting with all levels of my firm’s leadership in all divisions, attending dozens of industry conferences and interaction with other firm’s employees and representatives, I have a good insight of what happens in the industry and my firm. To simply dismiss my opinion as unknowledgeable is ridiculous.



Second, if you’ve actually read my posts I have not defended EJ or the current leadership within the organization in relation to what happened; there is no ‘toeing the line’. My exact quotes were,



" By and large, due to arrogance and bad decision making by the GPs EJ is in a pickle… I do believe there should be drastic changes at the GP level, though."



OR



"Jones isn’t going anywhere unless the GPs can make a killing (more than they do today) or Doug’s attorney continues to make statements to the press about this mess."



Please read my posts rather than skimming them and jumping to an invalid conclusion.



Third, rumors of EJs ‘buyout’ have been reported for years. The questions about our ability to serve in the industry have circulated for sometime. Comments about not offering online trading and be involved in high profile IPOs had other ‘experts’ questioning our business strategy. Yet we’ve managed to grow at a time when other firms have shrank through layoffs, buyouts or customer abanodment. EJ has always been a small fish in a big pond, that’s nothing new. The reality is the firm has persevered. This current event will be the test to see if we can survive this scandal. Let’s keep perspective, truth.



By the way, Merlot and Shiraz taste much better than kool-aid.   



Joedog



[quote=The Truth]

JOEDOG-

Let me give you some help. Before you comment on anthing that is going on, please go work for another firm and it will help shape any future comments you make. All you are reciting is the company line and you have to realize that your bosses are greedy croooks. Plain and simple. It is obvious you don’t know much about this industry when you talk about the “Finances” at Jones. Your company is a small fish in a very large pond and that pond will be shrinking in the near future. Can they survive? Economies of scale indicate they cannot.

Haven't you genius's figured out who the brilliant one was.

John B. presided over this mess for years, retired before the mandatory age and will keep his reputation and millions.

Hill was set up for the fall.

Some of us IR’s think Hill was set to be the fall guy from the beginning since he was so close to mandatory retirement age.  Thoughts?

I think Doug Hill got the job because he came up with the rev. sharing scheme in the first place.  That’s a total guess but it is strange that he is paying 3 mil. on his own…I’m sure he was a hero when he came up with the idea.

Revenue sharing has been around longer than Hill’s tenure.l

You are making the assumption that Hill is smart enough to come up with this idea?

I agree with Beach. Bachman is sly enough to set dumb cowboy bill up. Cowboy bill took the bait.

Hill is paying 3 mil because he was the architect of revenue sharing.  Trust me.  Also, look at the comments of his attorney to confirm this..he is trying to justify forgoing 8 bil in potential commissions for the rev sharing.  Granted Hill will be repaid from the firm as time goes on for being the fall guy,but the regulators wanted him out immediately.  It took a 12 hour call w/ the SEC to allow Jones the necessary time to find a replacement. 

I drank, am drinking, & will drink the kool aid, but Jones Management screwed up.  This is & was a conflict of interest.  I don't believe that it was a conflict of interest at the broker level.  But, the numbers don't lie.  When 95% of your fund biz goes to firms that pay you some kind of additional income, then something isn't right from a structural standpoint.  It exists everywhere, but the 95% & the full page ad make Jones the poster boy.

Hill deserves what he's getting.  In pursuing the leverage of rev sharing, the lawyers also should have pursued a higher level of disclosure.

beachbum,

Doug was there at the beginning of Rev. Shr....he just wasn't running the company...I think to was the mastermind...he's a numbers guy.

Some of us IR’s think Hill was set to be the fall guy from the beginning since he was so close to mandatory retirement age. Thoughts?

Doug Hill will gladly pay the $3M and be thankful that the SEC and NASD didn't decide to get rid of revenue sharing altogether.  He'll have his money back in no time.

If JB was still in place, DH would still have been the fall guy.  As COO he was running this part of the show and then he could not make the transition that he needed to make to be an effective MP. 

Edward Jones taps Greensfelder attorneys

Embattled St. Louis investment firm, Edward Jones, has added a large Washington, D.C. law firm to its arsenal to handle federal regulatory agencies questioning the company's mutual fund investment practices.

Jones hired Wilmer Cutler Pickering Hale and Dorr to represent the firm with the Securities and Exchange Commission (SEC), the National Association of Securities Dealers (NASD) and the New York Stock Exchange (NYSE).

Locally, Jones continues to employ Greensfelder, Hemker & Gale to deal with an investigation by the U.S. attorney's office for the Eastern District of Missouri, multiple class action lawsuits, and a lawsuit filed by the California attorney general's office. Greensfelder has represented Edward Jones in securities arbitration and other matters for years.

Several attorneys at Greensfelder, including white collar crime and regulatory compliance attorneys Jeff Demerath and Richard Greenberg and litigation practice manager David Harris, have been representing Jones in various actions in 2004.

Early this year, the SEC and the NASD began looking into Edward Jones' mutual fund sales practices, including the practice of revenue sharing with select mutual fund families. News stories about the issue spurred the filing of several class action lawsuits.

On Dec. 20, Edward Jones, without admitting or denying wrongdoing, agreed to pay $75 million as part of a settlement agreement with the SEC, the NASD and NYSE, and Managing Partner Doug Hill agreed to pay $3 million of the settlement and step down from leading the firm at the end of 2005.

The settlement with regulators came on the same day that California Attorney General Bill Lockyer filed a securities fraud lawsuit against the firm, alleging it defrauded customers by failing to disclose the revenue sharing arrangements it had with seven mutual funds.

Harris, who has been defending Edward Jones in the class action lawsuits, may be taking on the California case as well. Harris declined to speak about his role representing Edward Jones, citing a request from the brokerage. But according to the Greensfelder Web site, he often represents large brokerage houses in securities class actions and arbitrations.

Nine class action lawsuits were filed against Edward Jones and its executive committee between January and March 2004, according to SEC filings. Five were filed in federal court in St. Louis, with the rest filed in either Los Angeles or New York.

Demerath and Greenberg are no strangers to federal regulatory issues. Demerath, who recently represented former Charter Communications executive David Barford in a federal case involving inflated subscriber numbers, is a former assistant U.S. attorney. Three other former Charter executives were indicted in the case. Charter, as a company, was not charged with wrongdoing.

Greenberg was a trial attorney, then an assistant director, in the civil division of the U.S. Justice Department in the 1980s. Demerath declined to speak about his role representing Edward Jones, also citing a request from the brokerage firm. Greenberg did not return a phone call.

Hill, meanwhile, is represented by Gordon Ankney, an attorney with Thompson Coburn, one of a team of attorneys that represented Charter at the time the four executives were indicted.

Ankney did not return several phone calls seeking comment.

St. Louis lawyers on the plaintiffs' side include Robert Blitz, a partner with St. Louis law firm Blitz, Bardgett & Deutsch. Blitz was one of the attorneys who filed a class action lawsuit on behalf of numerous Edward Jones customers in January 2004.

URL: '+url+'

URL: http://msnbc.msn.com/id/6780063/

A lot of us were surprised by Doug Hill becoming MP.  The explanation given by Joedog is as good as any I have heard.  Nobody in my region had any explanation at all.

To me, that full page WSJ ad served as the triggering event.  It was a company standing up, waving it's arms, challenging an industry to take them down.  In fact it was down right cocky.  Uwec would be the one to ask, but I would think that ad alone would have provoked ex-brokers to contact the WSJ and blow the whistle. 

I know of no one in my old region who thought the ad was a good idea.  In times of trouble, you keep your head down and go to work.  You don't point fingers and draw attention to yourself.

EJ= Stupid

How about:

EJ = Effluent Jurisprudence (where history remembers EJ as "just desserts"?)

EJ = Exponentially Jacked (LPs get ripped off at order of magnitude)

EJ = Effectively Jones'd (New GPs)

EJ = Efficiently Juiced (Old GPs)

EJ = Enourmous Joke (self-explanatory)

EJ = Egregiously Jostled (whereas jostle is the old-world description of "to pick pockets")

OH, I COULD GO ON.....

I agree with Wyatt but the wrong that has gone on at Edward Jones started long ago with what I like to call the Van Pearcy road show. Let me tell you the story of Greed and Power at EDJ. I was with the firm well over 5yrs and recently left EDJ was not the first company I worked for. The Van Pearcy road show started in 1999-2000 those of you that were fortunate enough to see this know what I am talking about. Mr. Pearcy would get in front of a group of brokers 100-500 and extoll the virtues of Hartford Funds this in itself is not uncommon what was different was that Mr. Pearcy would give a detail demonstration of how Hartford revenue sharing could improve your bottom line and since Hartford had an NAV program you could move funds from other fund families specifically targeted was American Funds to Hartford and could benefit mostly through improved profitablity of your branch. In my region alot of the senior brokers did this as for me. NO I DID NOT. I couldn’t see moving someone from a fund with a …65% appr to a fund with with a 1.67% expense ratio. Well what happened next was American Funds found out. Tom Bartow left for American Funds and Van Pearcy a million dollar producer was supposedly fired for sexual harrasment. He was just the sacrificial lamb. This practice continued until Hartford changed there NAV program in May 2004.

I think if there was ever an opportunity for the state of California to get all the evidence it needs to close this deal, it’s in the person of Mr. Tom Bartow, “the broker’s broker”.  Come back Tom and help us storm the walls and retake the golden city.  We’ll throw out the stiff St. Louis boyz club and bring one home for Ted, god rest his soul. 

Perhaps that is the saddest part.  I believe that Ed and Ted had honest an noble intentions.  Good guys with a simple plan and high morals.  But this new group of guys, these bastards... have continued to wave that flag, all the while sacrificing their own integrity by deceiving brokers, clients, and regulators.  They have torn down all that the Jones' built and stood for.

I could be wrong, maybe Ed and Ted were no different, maybe I am naive, but I don't believe it.

As a broker who was not at the firm during the "Bartow years", what can you tell me about him?  I could have sworn I had heard people on the old board criticize him as well, or perhaps my memory is not so strong.  What was the consensus on Van Pearcy?  Just curious about the history here.

Tom Bartow was the salt of the earth.  If he couldn't get you fired up about your job it meant that you were dead.  He is also a Toro Fecundian....he can smell bullsh1t a mile away.  Which, coincidentally, is why he left Jones.

Tom Bartow, a modest basketball coach.  A stern look on his face, rarely cracked a smile, a simple man.  Someone told him to go door to door in Paducah Kentucky and recite the cold call script....and ask for the order!  He did it time and time again until he became a million dollar gross investment representative.  Started with nothing.

Then they put him in charge of hiring for the area, then a limitied partner, then asked him into St. Louis to head up training and become a General Partner.  He never changed and he never cared much for that "JB" guy, but neither did I.  His old office has now been carved up into 12 or so..... it always did take twelve of them to make one of him.

Ted Jones, Tom Bartow.....Legends.

In the news
<FONT =sub>

Satellite broadcast to focus on financial future for investors

The Chillicothe Edward Jones investment representatives will host a free one-hour satellite broadcast -- "Is the Uncertainty Over?" at 11.30 a.m. and again at 6:30 p.m. Tuesday, at the 109 W. Main St. office and at the 20 Executive Drive, Suite B office.

The broadcast will feature Geoffrey Colvin, co-host of "Wall Street Week with Fortune," and Alan Skrainka, Edward Jones' chief market strategist.

you gotta be kidding me?

I've said it before.  THis is much ado about nothing.  The average investor is just not going to care about all of the SEC/NASD stuff when they have been in American Funds earning 11-15%.  And what judge is going to say they've been 'damaged' anyway?  Most of the funds did fine for people and the Jones brokers will not suffer more than 1 or maybe 2 accounts leaving primarily to go to ambulance chasing former EDJ brokers.  Incidentally, most people don't care for the 'Nah Nah Nah Nah Nah Nah...Your broker's firm was naughty' routine when it comes to their money and who they trust with it...they do business with ME not my wirehouse. 

People don't care what their brokerage did or didn't do...they just care about their returns on their investments.  WIFM may not be how the world would look in utopia, but it is when it comes to their money.

Jones will be fine.  A few brokers who probably were considering leaving anyway will leave.  An even smaller percentage of accounts will leave and the CA suit will win a whopping 5 million dollars that Jones GPs will have made in the meantime on their money. 

Much ado...

So then, you are “1ofthem”.  Just like Jones…not what they claim to be.

Man… Jones is treated so unfarily in the media it’s pathetic.

Poor babies.

Jonestown,

Not to correct such an elegant mini-biograpahical reference to Tom, but Tom's office was never carved up.  Truth be known, a recent college grad name David Lane took the office over in 1992.  I never knew how that happened....but it was excellent foresight on Jones's part.  David doubled the production and doubled the assets.  As far as I can recall, Tom never hit a million in production either.  He was easily a top producer and one of the fastest starting office in the history of Jones...but he went to STL before his full potential could be realized in the field.

David took it to a much higher level...but he had a massive head start.

Beejeebers,

How is Jones treated so unfairly?  The lack of ethics in the way top management handled the firm finally bled through the bandage.  What's been unfair is the way the IR's were treated and the clients as well. 

Don't bother Zacko.  It's like talking to a wall. 

Picture this.  One guy at the dinner table with a giant booger hanging from their nose.  Knowing that with no mirror present the unsuspecting guy would most likely not notice the eyesore, someone at the table speaks up.  "Hey, man, you've got a hanger".  The guy simply says "no I don't".  So another at the same table says "no, seriously, you've got some unfinished business, give it a wipe"  our poor bastard in this story continues in his denial until each at the table has pointed out the nasty discharge.  He never looks at a mirror, never reaches his hand up for a feel, just vehemently defends his condition by accusing others at the table of having snot problems.  He would rather believe there is no problem at hand, no matter that everyone else has a plain view of the woman repellent just above his lip. 

Save your breath......wish I had.

[quote=Jonestown]

Tom Bartow, a modest basketball coach.  A stern look on his face, rarely cracked a smile, a simple man.  Someone told him to go door to door in Paducah Kentucky and recite the cold call script....and ask for the order!  He did it time and time again until he became a million dollar gross investment representative.  Started with nothing.

Then they put him in charge of hiring for the area, then a limitied partner, then asked him into St. Louis to head up training and become a General Partner.  He never changed and he never cared much for that "JB" guy, but neither did I.  His old office has now been carved up into 12 or so..... it always did take twelve of them to make one of him.

Ted Jones, Tom Bartow.....Legends.

Rumour has it that when Tom was offered Subordinated LP, he turned it down.  He said that was meant for TED, not him. 

That was quite a bit of money he walked away from.

If you understand a little bit of Jones' history, he was right.  I didn't always agree with his methods, but he was the "salt of the earth", and he had high standards.  When an organization starts to lose people like this, it is the beginning of the end.

[quote=illuminati][quote=Jonestown]

Tom Bartow, a modest basketball coach.  A stern look on his face, rarely cracked a smile, a simple man.  Someone told him to go door to door in Paducah Kentucky and recite the cold call script....and ask for the order!  He did it time and time again until he became a million dollar gross investment representative.  Started with nothing.

Then they put him in charge of hiring for the area, then a limitied partner, then asked him into St. Louis to head up training and become a General Partner.  He never changed and he never cared much for that "JB" guy, but neither did I.  His old office has now been carved up into 12 or so..... it always did take twelve of them to make one of him.

Ted Jones, Tom Bartow.....Legends.

Rumour has it that when Tom was offered Subordinated LP, he turned it down.  He said that was meant for TED, not him. 

That was quite a bit of money he walked away from.

If you understand a little bit of Jones' history, he was right.  I didn't always agree with his methods, but he was the "salt of the earth", and he had high standards.  When an organization starts to lose people like this, it is the beginning of the end.

I had dinner with David at a diversification trip. Nice guy, but give me a break I could have done what David has done or better if I were given a 100 miillion dollar office. However at Jones he is god. Why he doesn’t go independent is beyond me. Another example of stupidity after enough koolaid.

I love when somebody's entire post is a post of another post....insightful, and certainly not a waste of space or anything.

Bearcat,

That's hilarious! and really pretty accurate.

In response to NOT1OFTHEM comments about everyone being in American Funds, If you read my first post not everyone has been in American Funds for the last 4 yrs. They were switch to Hartford by their IR’S to receive a better payout on the revenue sharing issue. Then the question becomes how much money have these thousands of investors lost because of the actions of their IR’S actions. These people were never told has to the of the real reason for their IR’S recommendations. Check the performance how much better has American Funds performance been the last 4 yrs as compared to Hartford it is significant. As for the State of CA claim. Tom Bartow, will not say a word , Van Pearcy has no love for the way EDJ treated him, He currently works in Midland TX for Raymond James. As for Tom I have meet him since he left EDJ through his current job with American Funds. Very straight foward Man. God Bless Him

"So then, you are "1ofthem".  Just like Jones.....not what they claim to be."

For the record...I don't work for Jones...never have...never will.  No love for the place, but I do work in the St. Louis area so I see a lot of them.  I just choose not to concern myself with them for the most part.  That being said, my main point is that this is much ado about nothing. 

In response to NOT1OFTHEM. I am what I am. I no longer work for Jones. As for your comment that this is all much to do about nothing. Look at the number of views on this column since I first posted currently 11,226. Obviously alot of people don't share your view. As for the contest that is inconsequential compared to some of EDJ other practices.

Formerjbroker knows exactly what he is talking about because I have a strong feeling that many of these "other" EDJ practices are well know for those who have been with the firm for several years.

People can defend them all they want but there is 2 constant themes:  1)  The GPs are greedy and make it quite known  2)  The we are ethical than everyone else attitude has rubbed many people wrong, especially when you have guys such as Zacko, UWEC and Formerjbroker that knows what was going on from the inside.

Richard Loth
January 5, 2005

"There should be no conflict of interest - the client's interests always come first."

Last July, I provided that guidance in an article on "investment advice givers," i.e., brokerages, financial planners, insurance companies, banks and independent advisers. Among other qualities, I urged readers to insist on any advisory entity's complete objectivity regarding investment selections.

Unfortunately, not all providers of investment services have a clear, unambiguous understanding of what constitutes "complete objectivity." A recent major scandal, which I'll detail below, highlights why individual investors need to stay vigilant.

Millions of individual investors choose to maintain securities accounts with brokerage firms and follow the advice of their full-service stock brokers. As such, brokerage firms, and their representatives, play a major advisory role with the investing public and need to be held to a high standard of professional ethics.

A story that needs telling

Last month, the Wall Street Journal devoted four in-depth articles - on Dec. 21, 23, 28 and 29 - to the problems at Edward D. Jones & Co. involving revenue sharing and problematical trading practices.

Needless to say, this is a major story for the investing public. And yet, a thorough archive check of both of Denver's major newspapers, as well as the "News for Individual Investors" section of the culprit company's Web site, found no mention whatsoever of the Securities & Exchange Commission's investigation, findings, and sanctions.

Edward D. Jones is one of the largest retail brokerages in the U.S. Locally, it has a branch in Eagle, and nearly 10,000 offices nationwide. The case is particularly important because it only services individual investors - it has no institutional or investment banking business.

Therefore, its impact on the retail investing public is significant and widespread. The gravity of this case is further confirmed by the subsequent announcement of the resignation of Edward D. Jones' top executive, Douglas E. Hill.

The Wall Street Journal articles reported that Edward D. Jones' agreement with the SEC represents "the largest regulatory settlement to date involving revenue sharing at a brokerage house, an industry practice in which mutual fund companies pay brokerage houses to induce them to push their products."

The SEC report details how Edward D. Jones "accepted tens of millions of dollars in secret fees from seven preferred fund groups, potentially tainting the Jones brokers' investment advice to customers in favor of these hands.

Surprisingly, revenue sharing, which I think is a clear conflict of interest, isn't illegal. But investment intermediaries get in trouble when these arrangements are not disclosed to their customers.

SEC sanctions

A $75 million settlement will be available to Edward D. Jones customers "who the regulators contend were harmed because they didn't know their brokers might be unduly influenced by bonuses and other incentives to sell the preferred funds."

The fund groups are: American, Putnam, Hartford, Federated, Goldman Sachs, Lord Abbett and Van Kampen.

Under the SEC order, Edward Jones has to disclose its revenue-sharing practices on its Web site - www.edwardjones.com - and the aforementioned fund groups must also send the same information to current and former customers.

My purpose here is not to single out brokerages for condemnation of inappropriate revenue-sharing practices. Edward D. Jones just happens to be a very large target at this point in time, and the lack of public awareness of this case is worrisome.

One of the first things investors need to know from any investment intermediary is what is the investment or service going to cost. And that means the complete cost - fees, commissions, expenses, etc.

Brokerage representatives and other financial advisers need to fully disclose any and all financial incentives, whether direct or indirect, that would influence their decision to recommend one investment over another to their clients.

The Investing Wisely column is written by Richard Loth, managing principal of Mentor Investing, an independent registered investment adviser. Loth can be reached at (970) 827-5591 or [email protected].

Great article and the article mentions 1 item of particular interest. The article mentions there was no news about the scandal in the Denver papers.  I bet you can say this about New York, Chicago, Houston.  Point is Jones is the largest brokerage firm that no one knows.

[quote=Marshall]

I love when somebody’s entire post is a post of another post…insightful, and certainly not a waste of space or anything.

Bearcat,

That's hilarious! and really pretty accurate.

[quote=The Truth]Great article and the article mentions 1 item of particular interest. The article mentions there was no news about the scandal in the Denver papers.  I bet you can say this about New York, Chicago, Houston.  Point is Jones is the largest brokerage firm that no one knows.[/quote]

I sent the news to all of the newspapers within 75 miles and to the TV stations.  As far as I know, nothing was ever printed or broadcast.  I got 2 replies thanking me for my article, but that was it.  Can't figure it out.  I posted it under the "Scams" section 

Claim Says Morgan Stanley Got
Kickbacks to Push Some Products

By SUSANNE CRAIG and IAN MCDONALD
Staff Reporters of THE WALL STREET JOURNAL
January 7, 2005; Page C3

A new arbitration claim asserts that Wall Street firm Morgan Stanley received hidden incentives from several big insurance companies to push certain variable annuities and other investment products.

"Rather than placing the interests of their customers first -- as it is required to do -- Morgan Stanley put its interests first by acting in a manner that was designed to maximize the kickbacks it received under [a] distribution agreement," lawyer Ron Marron alleges in a complaint filed on behalf of a client he says bought two variable annuities from Hartford Financial Services Group Inc. that performed poorly and were unsuitable for the client's needs. He says Morgan was motivated to sell his client this product because of undisclosed payments the firm was getting.

A Morgan Stanley spokesman said the complaint is "wholly without merit. We're confident that the compensation arrangements covering these products have been appropriately disclosed." He said there is language in prospectuses that the firm believes constitutes disclosure. Hartford declined to comment.

This latest arbitration filing is believed to be among the first that zeroes in on alleged abuses in the sale of variable annuities, which are part insurance, part investment. The buyer, or contract-holder, invests money among various mutual-fund-like portfolios in tax-deferred accounts. The "insurance" consists of a stream of income the buyer receives from the account in retirement and a so-called death benefit paid to the contract holder's heirs. There is more than $1 trillion invested in variable annuities, according to the National Association for Variable Annuities.

The potential conflict of interest from brokers' hidden financial incentives to sell some investments over others has been an issue for some time. To get a spot on brokerages' preferred lists of mutual funds, for example, many fund firms strike "revenue sharing" deals by which a fund company pays brokerage firms a percentage of the sales the brokers bring in, on top of the commissions that investors pay.

For mutual-fund firms, these deals are a way to stand out from the ocean of choices available. Brokerages say these fees help cover the costs of marketing funds, but critics say they give broker incentives to sell funds that are more profitable for the firm and not necessarily the best choice for a given client.

Such arrangements are legal as long as they are properly disclosed. Late in 2003, Morgan Stanley paid $50 million to settle civil charges levied the by Securities and Exchange Commission that the firm failed to tell clients that it paid brokers more if they sold funds offered by 14 firms whose extra payments earned them a spot on the firm's preferred list of funds.

Mr. Marron's claim about variable annuities, filed in late December with the National Association of Securities Dealers, alleges, among other things, that Morgan Stanley entered into secret "distribution agreements" with various insurance companies through which Morgan Stanley got money for steering its clients into certain insurance products. The NASD said yesterday it is aware of the claim and it is looking into the matter.

Write to Susanne Craig at [email protected] and Ian McDonald at [email protected]

Hey Jones Boyz, get ready for phase II, or is it phase III,....let's see, late trading, kickbacks, 529, variable annuities.....ok I got it, PHASE IV! 

Elliemae

This was sent to me by an ex jones buddy in Denver.  I didn't hear from buddies in Houston or Dallas, but I am sure it made it there too.  Hard to believe New York had nothing.

http://www.rockymountainnews.com/drmn/business/article/0,129 9,DRMN_4_3413631,00.html

The claim against Morgan sounds bogus to me and unlike the Jones issue. Unless Morgan paid brokers more to sell "preferred" annuities and gave some sort of additional revenue or trips, etc, to sell specific products these are two separate issues. <?:namespace prefix = o ns = "urn:schemas-microsoft-com:office:office" />

It sounds like brokerages are open to these sorts of claims unless they have sales agreements with every single insurance company on the planet.

Good news for a change....enjoy!

Don't blame Bill Emeott if he feels like "Rip Van Winkle."

Emeott took a "nap" from bowling during the 1970s. Some 30 years later, Emeott awoke from his dream and recently bowled his first 300 game at the age of 60. Not only that, Emeott also connected on his first 700 series on the same day.

"I was involved with hunting and fishing back then," said Emeott of his decision to leave bowling. "I wanted to do those 'Michigan' type of activities and they were taking up most of my time."

Emeott picked up the ball for the first time in 30-plus years last April.

"My daughter was sick and she asked me to sub for her in a fun league," Emeott said. "I got the bug back."

Emeott contacted Doyle Israel for some advice.

"I went to Doyle to help out with my game and he also set me up with a new ball," Emeott said. "This is not like it was in the '70s.

"I had a 150 average back then. But with today's new equipment and lane conditions, it sure is a lot different. Back then you really had to work to get the ball to move to the pocket."

Emeott, who was averaging 183 in the Edward Jones Senior league prior to his big day, started out with a 300 game and followed with a 224.

"The first nine balls were easy," Emeott said. "They were all good pocket hits. In the 10th frame, I couldn't keep my legs still. I was shaking so bad. But I still managed to hit all three balls in the pocket."

Emeott still had work to go in trying for his first 700 series.

"Last week I had a split in the 10th frame that cost me my 700 series last week," Emeott said. "I finished with a 691 and I wasn't sure I was going to get another chance at it. I came out of the gate with the 300 game.

"The guys on my team kept telling me all I needed was to hit my average in the last game. It came down to the last frame again. I needed to pick up the four-pin to get it."

Emeott picked up his four-pin and finished with a 705 series.

"The 300 game was unbelievable. The Lord was with me. Unbelievable," he said. "But in my mind, I think the 700 series was harder for me to get."

Overachievers

It was seniors week for 300 games as Dave Austin also rolled a 300 game in the State Lanes Edward Jones senior league. Austin, who finished with a 697 series, was bowling on the pair of lanes next to Emeott. Both bowlers rolled their 300 games in the first game of the series.

Also in the Edward Jones senior league, Art Seiferlein rolled games of 247, 279 and 269 for a 795 series.

In the Crooked Creek Seniors league, Randy Hall rolled a 300 game en route to an 815 series.

In the regular men's leagues, Don Shaner was 183 pins above his 185 average with a 738 series. Shaner rolled games of 235, 245 and 258 in the LeFevre's Family Bowl Monday Nite 14 league.

Mark Zolinski rolled a nifty 821 series in the State Lanes American Legion Post 22 league. Zolinski started out with a pair of 279 games and finished with a 263 to go 182 pins above his 213 average.

Nick Makl III rolled a 300 game in the State Lanes Merchants Industrial league. Makl finished with a 726 series.

Mel Muehlenbeck was 153 pins above his 179 average in the State Lanes Prince and Princess Mixed Doubles league. Muehlenbeck rolled games of 234, 248 and 208 for a 690 series.

Also in the Prince and Princess league, Melisa Bremer rolled her first 500 series. Bremer, who has only been bowling for two years, had games of 172, 158 and 179 for a 509 series.

Barb Severs was 149 pins above her 181 average in the Candlelite Bowl Strikes Unlimited league. Severs rolled games of 215, 255 and 222 for a 692 series.

Barb Willing was 152 pins above her 168 average in the State Lanes Tuesday Nite Swingers league. Willing rolled games of 181, 218 and 257 for a 656 series.

Also at State Lanes, Sherri Bogardus was 145 pins above her 118 average with a 499 series on games of 163, 197 and 139.

Nicole Reis finished with a 411 series on games of 154, 157 and 110. Reis was 141 pins above her 90 average.

The teams of Gerald Little-Jenny Johnson and Joe Bowens-Mitch Putman each shot 1,380 to tie for the LeFevre's Family Bowl Holiday doubles tournament.

In the Stardust Lanes team holiday tournament, Norris Fleming rolled a 780 series which included a 276 game.

City Tournament

The City tournament opens at 11 a.m. today at State Lanes. Entry blanks must be turned in before the start of the first squad. The tournament will run through Sunday, Jan. 23.

Poor Charley

After its holiday season break, the Poor Charley tournament resumes today at LeFevre's Family Bowl. Registration starts at 12:30 p.m. with the bowling to start at 1:30 p.m.

Hall of Fame meeting

The Saginaw Bowling Hall of Fame annual meeting and elections will be at 3 p.m., Sunday, Jan. 23 in the State Lanes lounge. The regular Hall of Fame committee meeting will follow. Please RSVP Gail at (989) 777-7208. v

Beejeebers,

Assuming the "retard" remark was directed at me, I will clarify.  My response occurred mistakenly INSIDE Jonestown's quote.  Apparently you didn't READ the information, otherwise you would have noticed that.  Your salient "point" seems to be eclipsed by a little content. 

I have recomposed both remarks below so that you can understand this very difficult and confusing situation.  I have also underlined THE point so you don't miss it this time.

Jonestown wrote:

"Tom Bartow, a modest basketball coach.  A stern look on his face, rarely cracked a smile, a simple man.  Someone told him to go door to door in Paducah Kentucky and recite the cold call script....and ask for the order!  He did it time and time again until he became a million dollar gross investment representative.  Started with nothing.

Then they put him in charge of hiring for the area, then a limitied partner, then asked him into St. Louis to head up training and become a General Partner.  He never changed and he never cared much for that "JB" guy, but neither did I.  His old office has now been carved up into 12 or so..... it always did take twelve of them to make one of him.

Ted Jones, Tom Bartow.....Legends."

ILLUMINATI responds:

"Rumour has it that when Tom was offered Subordinated LP, he turned it down.  He said that was meant for TED, not him. 

That was quite a bit of money he walked away from.

If you understand a little bit of Jones' history, he was right.  I didn't always agree with his methods, but he was the "salt of the earth", and he had high standards.  When an organization starts to lose people like this, it is the beginning of the end."

Apology accepted.

It is obvious Beejeebers works at Jones.  They all start sounding alike at some point.  Do you still worship Dougie Hill?

Best viewed while humming "Memories" by Babs Streisand.....

memories...like the corners of my mind.... 

  http://www.edwardjones.com/cgi/getHTML.cgi?page=/ejhistory/s tory_00s_hillBIO.html

[quote=Jonestown]

Best viewed while humming "Memories" by Babs Streisand.....

memories...like the corners of my mind.... 

  http://www.edwardjones.com/cgi/getHTML.cgi?page=/ejhistory/s tory_00s_hillBIO.html

[/quote]

You know, there's a cosmic sort of balance to the story...hired on Christmas Eve, sh*tcanned on Christmas Eve. 

~Sigh~

Ok Kids let’s get down to business on the mutual fund revenue sharing issue Tom Miltenberger was general partner for mutual fund services. Tom is a unique fellow recently retired from EDJ. He was once offered a considerable amount of money from a competing firm to leave. Tom did not leave EDJ and was appointed to Mutual Fund Services. Later John Sloop, also,one of the three top owners of the firm took over mutual fund services. As I understand the lawsuit neither one of these gentleman was named in the lawsuit. Please correct me if I’m wrong. On a side note just talk to a buddy of mine at EDJ, and he is converted all his Putnam fund holders to American, Although I agree American has had better performance. I’m sure his actions are less than altruistic since American has never had an NAV program.

SAN FRANCISCO (CBS.MW) -- A grocery-store chain, a chemical company and a bank top the 2005 Fortune list of "100 Best Companies" to work for, released Monday and based mainly on a survey of each firm's employees.

Wegmans Food Markets, a Rochester, N.Y.-based grocery chain, moved to the top spot on the 2005 list, from No. 9 last year, due partly to its sweeter-than-average wages and generous medical benefits.

The company also gives generously to a college-tuition plan -- $54 million to about 17,500 workers over the past 20 years -- and makes sure employees have a say in how they do their jobs, said spokeswoman Jo Natale.

"Employees' ideas are listened to and they're given the opportunity to try new things," Natale said. "If they fail, that's OK ... It's just part of the fabric of our company that we share ideas, share information, take risks and try new things. That's encouraged."

That may be one of the reasons why some 6,000 Wegmans employees -- 20 percent of the company's work force -- have been with the firm for 10 years or longer, Natale said.

She has been with the firm for 19 years, and more than half of store managers started at Wegmans as teenagers, Natale said.

Workers are similarly empowered at W.L. Gore, which earned second-place honors on the list. At the Newark, Del.-based chemical company, maker of Gore-Tex fabric, employees evaluate each other to set salary levels.

At third-place company Republic Bancorp (RBNC: news, chart, profile), a small commercial bank based in Owosso, Mich., workers are sharing in profits, with each customer-service representative enjoying a $10,000 bonus last year, and almost half of nonmanagement workers given company stock.

This year, 356 companies took part in the Fortune magazine survey, up from 305 last year. Two-thirds of the results are based on employees' survey answers and one-third on researchers' assessment of each company. Companies must be at least seven years old and employ more than 1,000 U.S. workers to participate.

Notable absence

One name that's been among the top 100 companies for six years -- and was No. 1 for two of those years -- is notably absent this year: Edward Jones, the St. Louis, Mo.-based brokerage firm.

"The authors of the study say they removed Edward Jones from the survey because they could not validate that our associates' feedback, which was collected in June, would not have changed based on recent news events," said John Boul, a spokesman for Edward Jones.

The firm recently agreed to pay $75 million in a settlement with federal regulators over promoting mutual funds without disclosing to investors its revenue-sharing agreements with fund companies.

"We've been on the list for six years running. We were No. 1 in 2002 and 2003 (and) we've been in the top 10 five of the six years," Boul said. "Obviously, we're very disappointed."

He expects Edward Jones will participate in the survey again next year.

"Wegmans Food Markets, a Rochester, N.Y.-based grocery chain, moved to the top spot on the 2005 list, from No. 9 last year, due partly to its sweeter-than-average wages and generous medical benefits."

And how many current or former JONES reps know who 'Wegmans Food Market' is? 

I hope you are all paying attention to all of the 'signs', including this one.

In 24 hours, some of you will wish you had been working for "Wegmans Food Market"!

Edward Jones, and others, seem to believe that it's best for the mutual fund buyer to continue to buy his funds in the package they are best able to sell, much like the record industrys desire to limit your choice to albums/discs that they can best market. 

As the record industry has so painfully discovered, the consumer will no longer stand for the "pushing" of albums and discs by one artist, a style that forces the consumer to buy a disc of music with only one or two good songs, and multiple turds.  The mutual fund investor is no different. 

Today the consumer wants the best portfolio of funds, managed by the best managers per asset class/style, monitored by knowledgable financial advisors, in the most tax efficient manner, and with the cost/expense tied to the success of the endeavor.  They are finding this in the exploding world of the independant fee based advisor/planner industry, and you can't put the genie back in the bottle.

And you continue to steer customers into one of seven fund families and tell them to buy and hold for the long haul?

When I started in this business 20 years ago, I went door to door selling the advantage of investment securities over bank savings products....bank assets were my target.  Today, my firm targets the assets of stockbrokers and small town investment firms, those who've run out of ideas, and whose investments are underperforming. 

That's the new ball game boyz, and in the words of old Wyatt Earp, from the movie Tombstone "tell'em I'm comin', and hell's comin' with me"

Here is the problem.  Just like the GPs capitalize on hiring “Yes” men, the clients at Jones are not what you say sophisticated.  They aren’t the ones looking at the website and reading various publications online.  Jones will continue to sell inferior funds and line their pockets until this generation of baby boomers retire.  Once this happens Jones is in serious trouble because the next batch of potential clients will want other options than french fries with their value meal.

Offices in new building will host Open House Thursday

Five Cresco businesses will open their doors to the public this Thursday, Jan. 13, giving the public an opportunity to examine the new facilities.

An open house will be held at the offices of Edward Jones, attorney Todd Kowalke, World Travel, JP Accounting and H&R Block from 3 p.m. to 7 p.m. tomorrow (Thursday). The office building is located at 712 Second Avenue Southeast, Highway 9 east. It was constructed last fall by Malek Builders between Sue-Z-Q's Restaurant and the Cresco Liquor Store.

"Here we grow again"

Jones Discloses Secret Payments From Fund Firms

By LAURA JOHANNES and JOHN HECHINGER
Staff Reporters of THE WALL STREET JOURNAL
January 14, 2005; Page C1

.............Some of the worst-performing fund families offered Jones the richest incentives to sell their products. For example, Van Kampen Investments, which according to a Morningstar Inc. analysis is one of the poorer performers in Jones's stable, paid a whopping $22.24 per $10,000 of fund shares sold. By contrast, Lord Abbett & Co., one of the top-performing fund groups, didn't make any one-time payments based on sales. Both funds groups paid similar amounts in continuing asset fees. Both firms declined to comment.

That means a Jones broker who sold $1 million in Van Kampen funds last year would net a one-time revenue-sharing payment of $2,224 for the firm, and assuming those assets were held a year and didn't change in value, Jones would get an additional $966 in asset fees. If the same broker sold a Lord Abbett investment under the same conditions, the revenue-sharing payments would be only $1,000. Overall, Van Kampen paid Jones $13.2 million and Lord Abbett paid $10.6 million last year through November.

If mediocre or poorly performing funds on the preferred lists are paying more than stellar ones, it could lead brokers to push inferior products, industry watchdogs say. "It becomes more of a problem the higher the compensation is -- and the lower the quality of the product," says Mercer Bullard, a former staffer in the Securities and Exchange Commission's Investment Management unit and now a University of Mississippi law professor.

Marsh & McLennan Cos.' Putnam Investments, for example, was the worst performer among Jones's seven favored fund families, with only 29% of its stock and bond funds beating their peers over the past five years, according to Morningstar. But Putnam paid Jones hefty fees -- a one-time payment of $12.50 for every $10,000 in funds sold, plus annual fees of $7.50 for every $10,000 in shares held by the firm's clients.

..........Hartford Funds has one of the richest arrangements with Jones. Hartford's payments included an unusual feature, in which Jones was entitled to receive a share of Hartford's profits if the total holdings of Jones's customers were at least $1 billion. Overall, Hartford paid Jones $16.6 million last year, through November.

In a statement, Hartford said the payments reflect the company's launching of a mutual-fund business "from a standing start" in 1996. "Edward Jones provided distribution, for which they received due compensation as one of our key broker-dealers," Hartford said.

Through November last year, Federated Investors paid Jones $1.3 million. A Federated spokeswoman declined to comment on revenue sharing, but said Jones concentrated its sales in a handful of the company's top-performing funds.

Interesting....

View the most EMAILED links for today from WSJ.com:

GPs capitalize on hiring “Yes” men



----------------------------------



This is very true and why GPs have been able to get away with sooo much for so long.

[quote=uwec86]

107,

And I got the ball rollin!!!!!

This is the best Christmas ever!!!

Yes, UWEC86 did indeed get the "ball rollin" on the WSJ article last year.

I have never seen the guy so happy as on that day. 

"For example, we'll sell $25 billion in mutual funds this year. But we have no house brands even though we could make a certain amount of money by having the Edward Jones brand of mutual funds. But from our standpoint, there are reasons why we want our representatives to be able to pick and choose any fund that they believe is the right fund for their customer. There would be a certain amount of unspoken pressure if we put the Jones name on a brand. We would rather focus all our attention on adding offices, not becoming a manufacturer. We have no over-rides. No branch manager gets an over-ride at Jones. So if there were another company that had house brands and branch managers who get a share of the profit of that office, to emulate us just screws up the way they do business.

Porter also says there's more than one right way. So I want to make clear to everyone, when I say this is how we do it, it doesn't mean we're exerting a higher moral authority. This is what works for us. We simply are content to be there. The most important thing we did was to figure out who is our customer.As part of that, we have gone through Drucker's three questions which every organization -- not just business -- but every organization has got to be able to answer to be effective.

1. What is my business? What am I here for?
2. Who is my customer?
3. What is value to my customer?

And we went through that. We believe that value was peace of mind. Value to our customer was knowing that their investments were put in the most prudent places that we knew of."

Just a little vintage John Bachman ladies and gentlemen... read the complete transcript at... http://www.webster.edu/depts/business/akande/speeches/johnba chmanspeech.html
memories....

[quote=northstar][quote=uwec86]

107,

And I got the ball rollin!!!!!

This is the best Christmas ever!!!

Looks like Beejeebers is having trouble with the computer.

Very nice Jonestown.  Vintage homespun half-truths from the master.

Naw no trouble, I just think it’s funny when some dumbass is to lazy to
post anything so he just quotes someone else.  Kinda like the
dumbassess who put their name in their signature, when it’s ALWAYS
directly to the left of the post…

"Naw(,) no trouble(.),(sic) I just think it's funny when some dumbass is to(o) lazy to post anything(,) so he just quotes someone else.  Kinda(sic) like the dumbassess who put their name(s) in their signature(which of course IS the definition of a signature), when it's ALWAYS directly to the left of the post...

:P (childish archaic emoticon) "

***********************

There.  Now I've edited also.

Beejeebers-What does uwec86, wrote"107, and I got the ball rollin," mean?.

illuminati

That's hysterical..  

He looked at the map, picked the middle of the country and earned a B.S. in zoology, with a minor in business, at Kansas State University. He had planned to work in hospital administration and felt compelled to study a science.

“I’ve never had a job,” he quips. “I always worked for Edward Jones.”(Besides never having a job, Hill also serves on the boards of Webster University, Central Institute for the Deaf, the Saint Louis Zoo.

A must read for any aspiring GP......this story will captivate and inspire you to be the next....ZOOKEEPER.....BY Bantom books.....

http://www.stlcommercemagazine.com/archives/may2003/profile. html

Now, under the Justice Department sanctions, those two factors will be erased. Edward Jones must make its brokers available to representatives of about 240 mutual fund companies.

In addition, the firm no longer can tie bonuses to revenue sharing. Instead, bonuses must be based on all investments sold by a broker.

The revenue sharing incentives won't disappear entirely. Thousands of Edward Jones brokers participate in profit sharing. And revenue sharing is highly profitable.

But Martin, the U.S. attorney, said the sanctions his office imposed will benefit customers.

"We think opening up their brokers to nonpreferred fund vendors and eliminating a specific financial incentive to sell one fund over another creates a much, much safer environment, with much less potential conflict of interest," Martin said.

http://www.stltoday.com/stltoday/business/stories.nsf/moneym arkets/story/9C8F4446A91C861486256F91002543A4?OpenDocument&a mp;Headline=After+sanctions,+it's+no+longer+business+as+usua l+at+Edward+

[quote=illuminati]

There.  Now I’ve edited also.

[/quote]



Thanks professor, but “there” cannot be a sentence genius.  Also it should read “Now (comma) I’ve edited also”.



If you’re going to correct someone, you should at least be correct
yourself.  Although this is just a forum where I’m sure people
type quickly and don’t bother re-reading what they typed before hitting
"post reply".  Thanks for the help though.

A dose of higher education, that's what they need...

Hayes back on board of Edward Jones Advisory Group
By Herald staff/ The Corporate Shuffle
Sunday, January 23, 2005

Harvard professor emeritus Samuel L. Hayes III rejoined the Edward Jones Advisory Group to serve on the company's investment policy advisory committee. Hayes, who served on the committee for seven years, has taught at Columbia University and has co-written or edited numerous books on investing.

[quote=illuminati]

"Naw(,) no trouble(.),(sic) I just think it's funny when some dumbass is to(o) lazy to post anything(,) so he just quotes someone else.  Kinda(sic) like the dumbassess who put their name(s) in their signature(which of course IS the definition of a signature), when it's ALWAYS directly to the left of the post...

:P (childish archaic emoticon) "

***********************

There.  Now I've edited also.

[/quote]

I really enjoyed that...Thank You!

Beejeebers,

You're just a pu$$y!  Try sticking to a debate on the issues...if you can comprehend them.  You gave me a hard time for attacking my old firm and wasting my time in that effort, you seem to have twice as many posts as I do...with a great deal less intellect.  Go back to your STL cube, loser!

GOOD LORD.

That speaks Volumes.......

That last entry related to the "ZOOKEEPER" post.

Gee Beejeebers!  If you don't work for Jones and you never worked for Jones and you don't have a dog in this fight and you don't care, why do you post in this section?

'Preferred' Funds Get More Money

By KATHY CHU
DOW JONES NEWSWIRES
January 25, 2005; Page C19

A mutual fund that is part of a brokerage firm's "preferred" group of investments can receive as much as 10 times the amount of money as another fund not on the list, according to new research.

This finding, from Cerulli Associates, a Boston research and consulting firm, comes as regulators scrutinize a common but contentious industry practice under which mutual-fund firms pay brokerage houses to promote their funds. The payments, known as revenue sharing, are a key factor in determining which funds get on the preferred list.

Cerulli's research, covering 45 small and large brokerage houses and mutual-fund firms, shows that competition for a spot on preferred lists -- the majority of which could include fewer than 30 funds -- is intense, since these favored funds can receive, on average, three-times greater inflows than those not in this group. More than half of advisers place at least 11% of their assets with their firm's preferred partners, "raising concerns about a pay-to-play environment," according to Cerulli.

At some firms, the contrast may be even starker. For instance, regulators say that at Edward D. Jones & Co., the brokerage house that agreed to pay $75 million to settle regulatory charges that it failed to adequately disclose the payments, 95% to 98% of mutual-fund sales historically involved seven preferred fund families. Regulators also have settled charges against Morgan Stanley, as well as mutual-fund firm Massachusetts Financial Services Co., related to disclosure of mutual-fund sales incentives.

But these settlements are unlikely to be the last word on the matter. The Securities and Exchange Commission continues to look into whether revenue-sharing arrangements hurt investors. Separately, the Department of Labor is reviewing the disclosure of this practice, and how it affects fees in company-sponsored retirement plans. A DOL advisory council late last year recommended new rules that would, among other things, help plan sponsors "obtain full and complete information concerning all revenue-sharing arrangements for each individual investment option."

Revenue sharing is legal, but has raised concerns because of its opacity.

One issue that regulators are looking at is whether revenue sharing raises fees for investors, who could be offered higher-priced funds that pay more revenue sharing instead of lower-priced options. The Labor Department, when it looked at retirement-plan fees in a 1998 report, noted that "observers have suggested that some plans absorb as much as 100 basis points in higher fees and expenses presumably due to ignorance about the extent of fees being charged."

However, concern about higher expense ratios may be overblown, according to Cerulli's research. For smaller firms, it could cost them less to sell funds through distributors and pay revenue-sharing fees than to build out their own sales force to offer the funds. Also, revenue sharing doesn't automatically lead to higher expense ratios because this practice is inherent in less-expensive institutional mutual-fund shares as well as in retail funds, said Benjamin Poor, a senior analyst at Cerulli.

Facing regulatory scrutiny, financial firms are increasingly disclosing this practice in securities filings. Some, such as UBS AG and Citigroup Inc.'s Smith Barney unit, even have details of revenue-sharing agreements on their Web sites. Edward Jones and Morgan Stanley have also posted this information online after settling with regulators.

Resistance to full disclosure, though, remains strong. Nearly half of the advisers polled by Cerulli said that they would be reluctant to sell preferred funds if they had to disclose this information.

Cerulli's research shows that the majority of asset managers, including mutual-fund firms, have recently agreed to increase the payments made to brokerage houses to get funds in the lineup. Also, companies haven't shied away from introducing new share classes, such as those in retirement plans, often to allow greater revenue sharing.

While numbers tell one tale, looking for other details in quarterly reports -- like changing upper management -- can give an alternate view of the inner workings of a firm, said Jorge Hoffmann, an investment representative with Edward Jones in Rockledge.

"Oftentimes, when there is a management change, it's because there are problems," he said.

It also would behoove an investor to look at industry trends when choosing a stock, Hoffmann said.

For instance, he said Edward Jones is not suggesting buying any companies in communications because, right now, consumers are clambering after the best deal in the midst of a "price war" that is cutting profits.

"We also don't like transportation now -- trains, airlines and cars -- because the earnings are not consistent, very cyclical," Hoffmann said.

I know he didn't just say that, you can't make it up.

Interesting post.

I wasn't aware UBS and Citigroup had information on their websites regarding revenuew sharing.

Top Stories

01.28.05 - The Sonoma Valley Chamber of Commerce's upcoming Tuesday, Feb. 1, breakfast forum will feature inspirational speaker Craig MacFarlane and newly elected City Councilmember Joanne Sanders, who will discuss local job trends.

Sanders is the president and founder of Bolt Staffing Services, an employment agency with three offices in Northern California. The company specializes in accounting placement services. Inc. magazine recently ranked Bolt Staffing Services among the top 500 fastest-growing private companies in the nation.

MacFarlane, who has been blind since age 2, developed an inner vision that has driven him to amazing achievements. He is a former competitive wrestler and the 1983 winner of the National Blind Downhill Skiing Medal. MacFarlane also excels at waterskiing, golf, track and field, horseback riding and ice skating; he is an accomplished musician and published author. In recent months, he has been visiting Edward Jones communities throughout North America. His Sonoma appearance is being hosted by Gary Scott, local Edward Jones representative.

The forum will run from 7:30 to 9:30 a.m. at the Lodge at Sonoma. Registration is $20 for chamber members, or $25 for the general public, and includes breakfast. For reservations, call 996-1033.

"Good...Good....Good...Good Vibrationsssssss!  Roll out the Road Show!

Where do I start....well, use your own punch lines.  I personally like the coal mine paragraph. 20,000 views or bust! 

SOUTHERN ILLINOISANS AT WORK: BROKER THERE FOR HIS CLIENTS' NEEDS

CHUCK NOVARA / THE SOUTHERN

Name: Thomas Bubanovich

Occupation: Investment representative for Edward D. Jones in Johnston City

How long in position: Bubanovich said he has been with the company almost five years.

General duties: "I try to learn what a client's investing goals are, then use our myriad resources to meet those needs," Bubanovich said.

Special equipment used on the job: "We have a computer and a couple of programs to do analysis with," Bubanovich said. Otherwise, he said, he generally uses nothing more special than a pencil and paper.

Dress code: "We try to look nice," Bubanovich said. "Most of the days I wear a shirt and tie."

Hours: Bubanovich typically works from 8 a.m. to 5 p.m. Mondays through Fridays, but he also works by appointment. "Basically, if a client needs to see me, I'm there for them," he said.

Other work experience: Bubanovich is a retired coal mining engineer. He also taught courses in economics at Southern Illinois University Carbondale while getting his MBA.

Education background: Bubanovich has an MBA from SIUC.

Was the job his original plan in life? After being let go from the coal mines in 1997, Bubanovich said he was led toward the Edward D. Jones firm from his own rigorous investment experience. He applied for a job online and was hired one week later. "I didn't know quite what I was getting into, but I'm glad I did it," he said.

What he likes best about the job: "We can bring value to people's lives; that is my favorite thing," Bubanovich said.

What he would change about the work: "I wish we had more higher-paying interest bonds to offer people," he said.

Life lessons learned on the job: "I don't know if the job has taught me any lessons, because I've always been a pretty disciplined investor," Bubanovich said, but he added a person is never to young to begin planning for his or her financial needs later in life.

Would he recommend the job to another person? "I would recommend it to people if they wanted to help people and not just wanting to make money," Bubanovich said.

Everyone has something interesting about their jobs. SOUTHERN ILLINOISANS AT WORK is a weekly business feature that highlights local people working in and around the community. If you have a suggestion for a job profile, contact Caleb Hale at (618)351-5090 or email him at [email protected]. Profiles are free of charge.

Do you have an MBA,idiot? I’m not sure what the point of showing us this article was, but I can assure you that I would rather give my 500,000 to Caleb than to a snot nosed, sarcastic, never-works-but-sits-online -all-day arsehole like you. I think Mr and Mrs medium sized investor agree with me too.

It is amazing the amount of time 6 people can spend posting lies and half truths about the company that will have nothing to do with their cheating ways. So how much in bonds do you have in that wrap fee account?

I like the comment regarding the pencil and paper being his primary weapon of choice.  I guess he forgot to mention the ICA chart.

Jealous Jonestown:



Pronunciation: 'je-l&s

Function: adjective

Etymology: Middle English jelous, from Old French, from (assumed) Vulgar Latin zelosus, from Late Latin zelus zeal – more at ZEAL



Definition:

hostile toward a rival or one believed to enjoy an ADVANTAGE



- jeal·ous·ly adverb

- jeal·ous·ness noun



______________________________________________

The grass is still GREENER where you water it!

Thanks for the english, french and latin lesson.  I do appreciate it.  I would say my comments are more toward one believed to enjoy an advantage as a rival would not be close to accurate.

So are you saying that you and Jonestown are one in the same?

After being let go from the coal mines in 1997, Bubanovich said he was led toward the Edward D. Jones firm from his own rigorous investment experience.

MBA...... Mining, Bowling & A couple of programs.... that should about do it.  

Jonestown envy,



Yes, therefore this MBA must be a terrible person.



Get over it, move on…



Do you just hate your life? Do you have any friends? Wife left you? There are hotlines you can call for these type of depression problems.

Edward D. Jones & Co., a nationwide brokerage firm that caters largely to individual investors has agreed to settle SEC charges and pay a $75 million fine, according to a report in the Wall Street Journal (Dec. 20).  The firm settled charges that it marketed mutual funds to its customers as among the "best" choices available to investors without disclosing that the funds paid the firm a fee to be included on the list--a fact that any reasonable investor would--or at least should--consider quite important in making a decision about what assets to purchase.  The settlement is part of a continuing effort by the SEC to police conflicts of interest on Wall Street, and another example that sometimes the difference between a broker and a used car salesman can be quite small. (ph)

December 20, 2004 in Civil Enforcement, Securities | Permalink

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A lot more on this kind of stuff coming soon!

George ("Wall Street Mole")

Posted by: George Smiley | December 30, 2004 04:19 PM

I complained to the SEC on June of 2004 about being steered into funds by Edward Jones. The SEC forwarded the complaint to Edward Jones compliance Dept., and they basically whitewashed it, and told me where to go.
So what's happening now couldn't have been more appropriate or just. I hope they get treated by regulators and the state Atty Generals the way they treated the public!!

Posted by: Arnold Herschkowitz | January 14, 2005 06:05 PM

The guy gets fired from the coal mines after it is on the verge of shutting down.  Jones hires him because they feel he has an in on the 401K rollover business.  He comes out firing out of the gates by getting rollovers from the miners with 30+ years in the business.  He allocates all of the proceeds into American Funds and that is why he only needs the pencil and paper.  Sound about right?

A couple definitions according to Webster:



envy

Pronunciation: 'en-vE

A PAINFUL or resentful awareness of an ADVANTAGE enjoyed by another joined with a desire to possess the same advantage.



jealous

Pronunciation: 'je-l&s

Hostile toward a rival or one believed to enjoy an ADVANTAGE.





______________________________________________

The grass is still GREENER where you water it!

By Chuck Jaffe, MarketWatch
Last Update: 12:01 AM ET Jan. 30, 2005

BOSTON (MarketWatch) -- Fund investors were promised good medicine to combat the industry's problems.

But increasingly the cures of "transparency" and "disclosure" turn out to be placebos, and investors just got the latest example.

Wringing your hands and hoping EJ goes down the tubes isn't going to make it happen. There have been 10-12 ex-Jones brokers who have been predicting the apocalypse for Jones for 2 years now, and yet the accounts keep going up, the revenue keeps increasing , the number of IRs is moving up. It simply isn't going to happen. Go back to your desks, go to work and shut the hell up for once.

[quote=Bill Fakkland]

Wringing your hands and hoping EJ goes down the tubes isn't going to make it happen. There have been 10-12 ex-Jones brokers who have been predicting the apocalypse for Jones for 2 years now, and yet the accounts keep going up, the revenue keeps increasing , the number of IRs is moving up. It simply isn't going to happen. Go back to your desks, go to work and shut the hell up for once.

[/quote]

Bill you are one funny person, you're always coming up with great comic relief.  Keep up the good work and keep an eye out for what's in the best interest of your clients, your family and yourself.  Eventually you'll make the correct choice.

Its The Capital Base Stupid!

No Lance, it’s not the capital base. Its the fact that you’re an idiot with an axe to grind. Oh my, THEY LIED TO THE SEC!!! Is that your next line? Jones is no more likely to go “under” than Morgan Stanley or any of the others. The churn rate at Jones is less than half the industry average. Most of their clients have recovered from 2001-02 and are pretty happy these days. Its only morons like you that perpetuate the myth that the sky is falling. Shouldn’t you get on the phone to generate some commission to pay the lease on your ugly Infiniti SUV ? You really make me sick.

Dear Billy,

You can call me everyname in the book.  For the sake of this post I will agree I am an idiot, in fact I should be on the phone generating commissions, in fact I own an Infinity SUV (it is Gold)  , I might even make you sick to your stomach!  I agree with you on almost everypoint.

But the PROBLEM for you and all of the JOnesies is that no matter what you say, no matter what you believe, no matter what you wish, if there is a big judgement ($300 million or more) against Jones for whatever reason EDJ will be heading toward SIPC recievership.

Why?  Because the SEC requires firms to keep enough capital unincumbered to satisfy Fed Reserve Regulations and Customer Reserve requirements.  EDJ needs the capital to support its margin base.  

Why?  Becuase EDJ can not raise capital even from its goofy IRs through the LP practice ....No one wants to invest in the the uncertainity of a law suit.  No law firm will put out a legal opinion that there on no significant legal matters that need to be disclosed.    

If you don't like it call you congressman and get them to change the SEC NET Capital Requirements for the B/Ds and the Federal Reserve Requirements for margin capital. And THAT BE The FACT!

Remember Drexel Burnham and General American were "profitable" right up till the time the regulators closed them down! 

Its The Capital Base Stupid!

I hope you feel better Billy, but I got to tell you.  Turning toward that jug of Jones Juice ain't goin to help what y'all got!

Your Pal,

Lance

[quote=Bill Fakkland]No Lance, it's not the capital base. Its the fact that you're an idiot with an axe to grind. Oh my, THEY LIED TO THE SEC!!! Is that your next line? Jones is no more likely to go "under" than Morgan Stanley or any of the others. The churn rate at Jones is less than half the industry average. Most of their clients have recovered from 2001-02 and are pretty happy these days. Its only morons like you that perpetuate the myth that the sky is falling. Shouldn't you get on the phone to generate some commission to pay the lease on your ugly Infiniti SUV ? You really make me sick. [/quote]

Bill stop it your killing 'cuz I'm laughing so hard.  Who writes your material ?????  Why should you worry if your employer lied to the SEC?  (I nearly didn't make the loo 'cuz of the bladder pressure). 

I'm sure Bill Singer is getting a laugh out of that line too.... "so what if they lied to the SEC"  This from the firm that claims to do what is in the client's "best interest"   ...

SO WHAT IF THEY LIED TO THE SEC !!!!!!

So much of what is posted here is wishes and dreams with little to support it.

Legs, on what athority do you have it that Jones is having an issue with capital?  I know the statement about them not getting LP is just your wishing with not facts and want to know if the capital thing is in the same ball park or you have a link that you can point us all to.

Frank

Good question!  And thank you for not calling me gay, envious or jealous!

I wish there was one link, but first go to this one;  it is the EDJ Statement of Financial Condition from 6/30/04.  Please look at the Partnership Equity   http://www.edwardjones.com/cgi/getData.cgi?file=/pdf/stateme nt_financial_condition.pdf

It says $714 million.  Now subtract about $75 mil from that y'all gave to that prosecutor feller.  Note there is nothing in that statement that shows any reserves for fibbin to the SEC.  That leaves y'all with about $640 million of good capital.  Take about 10% off of that for non-allowable assets; things like real estate and fancy computers and satellites systems that do not work all of the time and you get down to about $580 million of net capital.  But I am just estimatin all of this.  

Now look at Recieveables from customers (margin loans) that is about $2.4 billion. Y'all need about $250 mil of good capital to support that.  Without nid-pickin through the FOCUS report we can sorta probably guess that the surplus good capital is about $580 mil(good) - $250 mil (need) = $330 mil (surplus).  This is the amount over and beyond what y'all need to support those customer margin balance.  There is some other fancy accounting but that is the basics.  

Now lets suppose that CA suit comes in at only $100 million, that brings the surplus down to $220 million.  Now lets say those hungry plaintif lawyers convince the good judge and those nice people on a jury that y'all owe another $250 mil...UH OH!  NET CAPITAL VIOLATION. (I don't think I need to post those links to the CA and Class action claims again...y'all know that they are there and I ain't makin 'em up!)

Quick y'all got to raise $30 million ASAP.  But ya can't do it.  The fancy examiners come streamin in from the NYSE and they got to call in SIPC to sort everything out. Oh, I forgot to mention, this is just the bad stuff that y'all know about.  What about the stuff that you don't know about.  As I keep sayin:

Its The Capital Stupid!

I ain't wishin' any of this. I am just pointin out to y'all that this is a real possibility.  If you do not think so...then fine...then don't think so, but that would be just stupid wishfull thinkin on y'alls' part. And this has nothing to do whatsoever with my sexual orientation! It has everything to do with arithmatic and those fancy net capital laws that the G-Men enforce!

Of course I could be completely wrong, and EDJ could prevail over the CA and all Class Action Claims....but NO ONE can predict with any accuracy the outcome of this stuff.  I am just showin' how you can get to SIPC with what we all know and answer y'all question.

Hopes this helps!

Your Pal

Lance

OK, understand your logic but having been a partner at Jones (LP not GP) and still good friends with several GPs I can point out one flaw in your math.  The $75 mil came from the GPs and not the Partnership Capital.  And to add insult to injury, they still have to pay taxes on that money that they got.

<?:namespace prefix = o ns = "urn:schemas-microsoft-com:office:office" /> 

But even using your math on suits and settlements, Jones still has $220 million available (the report states $580 mil beyond what is needed).

I am not sure what will happen with the class actions.  Most states would include the actions into the settlement but liberal judges will be liberal judges.  This could be big but it will likely be years before anything comes of this.  So even if they loose these, they will have plenty of time to build a war chest.

Before we can make any judgments on <?:namespace prefix = st1 ns = "urn:schemas-microsoft-com:office:smarttags" />California, we need to wait and see what happens when Jones has to respond at the end of February.  The strength of the case will be clear when we see how many of the injunctions that Billy asked for are granted.  At least 6 of the 12 have already been agreed to by Jones in the Federal agreement.  If the findings by the US AG are not as bad as Bill would like (and remember, 60+% of the performance they will be looking at comes from American) then this one could go down the tubes.  And the US AG has no incentive to build this one up.  They already have a settlement and I am sure would love to embarrass Billy Boy.

Frank



At least you get the picture, if the CA AG and the plaintif guys are lucky they can grab a bunch of the capital. It basically comes down to math.



1. There is a finite amount of capital

2. It is unlikely they can raise any like they always have been.

3. The CA AG and the Class Action guys what all of the capital that is there.



Will the AG and Class Action guys be successful? AND this only what we know, what about what we do not know?



The other math that I did not include is, if and when the, LPs start leavin’ and their units need to be redeemed. I know of at least five of them over the next month that will do this.   That is a direct hit on capital AND until all this legal stuff is over it is real hard for those GPs to do another LP offering.



Oh Yeah! Don’t beleive the GPs because the settlement with the PROSECUTOR was between the company and the Feds. I guess we will see in April when the statement of financial condition as of 12/31/04 is printed (you know the one that none of the IRs know how to read)how much the audit firms will be requiring EDJ to book as contingent liabilities for all of this stuff. Remember contingent liabilities are a direct hit to capital.



Also I heard that Smith Barney has a $25,000 bounty out for any rep that can “capture” a Jones IR!



Best



Lance

average LP is far less than you would imagine… Not much of a “run on the bank” Lance SSB is also offering some of us 125% of trailing twelve… Still not a good deal…

$25k.



Those EJ reps are worth that much?



Wow.

Now look at Recieveables from customers (margin loans) that is about $2.4 billion. Y'all need about $250 mil of good capital to support that.  Without nid-pickin through the FOCUS report we can sorta probably guess that the surplus good capital is about $580 mil(good) - $250 mil (need) = $330 mil (surplus).  This is the amount over and beyond what y'all need to support those customer margin balance.  There is some other fancy accounting but that is the basics.

Lance,

I agree with you on many points, but after a lot of thought, I wish to offer a different outcome:

#1 The California AG settles for $100 Million.  This is less than what some expect, but the trail is blazed and EJ has all but admitted guilt in regards to the non-disclosure of Revenue-Sharing.

#2 The class action lawsuits combine, and settle for $100 Million.

#3 Through the course of the year, 2000 Jones reps leave (Net). Assuming this is a cross-section of Jones Reps, this would create a $350 Million reduction in Revenue (this assumes an even reduction through the year and not a sudden drop off after the first quarter which would bring this number to $550 Million). Most of this reduction falls straight to the bottom line.

#4 These same individuals request their LP (SLP or GP) payout of $180 Million throughout the course of the year.  This is proportionate to the total capital outstanding as it relates to the assumption in #3.

As you can see, Lance, this creates a demand of capital outflow of $630 Million, with the lawsuit portion being fairly light.

IT DOESN'T INCLUDE THE LOSS FROM ALL THOSE FIVE AND TEN YEAR LEASES JONES HAS BEEN SIGNING THAT MAY REMAIN EMPTY.

IT DOESN'T INCLUDE THE EXTRA ADVERTISING COSTS JONES HAS ALREADY EMARKED UPON, DEMONSTRATING TO THE PUBLIC THAT "ALL IS WELL".

IT DOENS'T INCLUDE THE NAV TRADE COSTS OF ALL FUNDS FOR 90 DAYS IMPOSED BY THE USDA.

IT DOESN'T INCLUDE THE HIRING AND TRAINING COSTS OF $75,000/HEAD THAT JONES WILL INCUR FRANTICALLY TRYING TO KEEP THE EMPTY OFFICES FILLED.

What are YOUR thoughts??

Lumi, WOW… You give way too much credit to yourself… And to the 2000 IRs who leave… Tell me, how much capital did you have when you left?? Less than 100k I promise you…

<SPAN =h2hed>Tsunami-aid auction brings caterer $2K

Jonestown,

Stop I'm getting verklempt     

[quote=illuminati]

Now look at Recieveables from customers (margin loans) that is about $2.4 billion. Y'all need about $250 mil of good capital to support that.  Without nid-pickin through the FOCUS report we can sorta probably guess that the surplus good capital is about $580 mil(good) - $250 mil (need) = $330 mil (surplus).  This is the amount over and beyond what y'all need to support those customer margin balance.  There is some other fancy accounting but that is the basics.

Lance,

I agree with you on many points, but after a lot of thought, I wish to offer a different outcome:

#1 The California AG settles for $100 Million.  This is less than what some expect, but the trail is blazed and EJ has all but admitted guilt in regards to the non-disclosure of Revenue-Sharing.

#2 The class action lawsuits combine, and settle for $100 Million.

#3 Through the course of the year, 2000 Jones reps leave (Net). Assuming this is a cross-section of Jones Reps, this would create a $350 Million reduction in Revenue (this assumes an even reduction through the year and not a sudden drop off after the first quarter which would bring this number to $550 Million). Most of this reduction falls straight to the bottom line.

#4 These same individuals request their LP (SLP or GP) payout of $180 Million throughout the course of the year.  This is proportionate to the total capital outstanding as it relates to the assumption in #3.

As you can see, Lance, this creates a demand of capital outflow of $630 Million, with the lawsuit portion being fairly light.

IT DOESN'T INCLUDE THE LOSS FROM ALL THOSE FIVE AND TEN YEAR LEASES JONES HAS BEEN SIGNING THAT MAY REMAIN EMPTY.

IT DOESN'T INCLUDE THE EXTRA ADVERTISING COSTS JONES HAS ALREADY EMARKED UPON, DEMONSTRATING TO THE PUBLIC THAT "ALL IS WELL".

IT DOENS'T INCLUDE THE NAV TRADE COSTS OF ALL FUNDS FOR 90 DAYS IMPOSED BY THE USDA.

IT DOESN'T INCLUDE THE HIRING AND TRAINING COSTS OF $75,000/HEAD THAT JONES WILL INCUR FRANTICALLY TRYING TO KEEP THE EMPTY OFFICES FILLED.

What are YOUR thoughts??

[/quote]

Again, here is the math facts:

1. EDJ has a Finite Amount of Capital base of $650 - $700 million

2. No way for EDJ to raise any Capital (except through earnings - if there are any)

3. We know the CA AG and the Class action boys are seeking at least $800 million, we do not know how much they will ultimately get

4. Today they need $250 minimun of capital to comply with Net Capital Rules.

5. If the net capital for ANY REASON drops below that number REGARDLESS OF SALES, ASSETS, or PROFITABILITY.  Then SIPC comes in and takes over.

As I said before this is what we know about, the fun stuff is what is coming that we do not know about

Hopes this answers y'all question!

Cheers,

Lance

The California AG settles for 100 million? You guys are completely nuts. If you had any credilbilty before that clunker, that’s all gone now. Hey, why not pick 5 BILLION dollars…no…100 BILLION DOLARS.thats it! The AG will settle for 100 Billion! woo hoo!

American Express to Exit the Financial Advisory Business

By David A. Geracioti
Feb 1, 2005 6:32 PM

American Express announced today that it is spinning off its Financial Advisors unit (AEFA) from its credit card and travel operations. American Express shareholders rejoiced, sending shares up 6.4 percent. AEFA will be spun off to shareholders and not sold, Amex executives said, because of adverse tax consequences that shareholders would have faced in a sale.

.......In September 2004, Registered Rep. published a story called “The Great Experiment”, which detailed the problems plaguing AEFA. “With a tradition of grooming brokers from scratch, American Express Management hoped the franchise option would attract more seasoned planners who would bring sophisticated skills—and rich clients—under the corporate umbrella. The strategy hasn’t quite panned out.” For more, see registeredrep.com/mag/finance_great_experiment.

This article knocks the legs out from under the value of a far flung network of captive advisors for a number of reasons, couldn't happen at a worse time for you know who.....oh no, not a Merger of the Clones!!!!!

http://registeredrep.com/news/amex-spinsoff-aefa/

Why Howday Potna!...

"I'm all tapped out Marv" ?

Putnam May Owe $100 Million

By JOHN HECHINGER
Staff Reporter of THE WALL STREET JOURNAL
February 2, 2005

BOSTON -- An independent consultant has found that improper share trading at Putnam Investments shortchanged investors by as much as $100 million, about 10 times a previous estimate of damages, according to people familiar with the matter.

www.wsj.com

[quote=Bill Fakkland]The California AG settles for 100 million? You guys are completely nuts. If you had any credilbilty before that clunker, that's all gone now. Hey, why not pick 5 BILLION dollars..no...100 BILLION DOLARS.thats it! The AG will settle for 100 Billion! woo hoo![/quote]

ROTFLMAO 

I'll eat my hat if all of the lawsuits total more than 10 million combined.  Jones will make more than the total gross settlements in the next two weeks.  Lance has apparently been drinking not koolaid but heavy alcohol if he really and truly believes that the CA AG will get anything more than a couple mill tops.

Lance, please detail your numbers for the 800 million… Please post any relevent articles that helped you come to that conclusion. You seem to think you are anumbers guy, let’s see that work product… CA AG could care les anymore about the settlement. he will never see it. He got what he wanted. EVERYONE KNOWS HIS NAME…

Guest 1,

Gee fella I didn't think y'all thought I was a "numbers guy".  Lets see if I reckon out this arithmatic for y'all...

I reckon EDJ Net Capital is ruffly $650-$700 million

Those G-Men tell us all that EDJ needs about $250 million to support all of that cash that those nice customer borrowed from EDJ....somethin called margin loans.

So with a little bit of figurin I come to about $400 million that EDJ has to play with before those G-Men cum in and take over...something called recievership SIPC or somethin like that.

But when the Californi Attorney man says that he wants $300 million of that $400.  Now I do not know about those fancy claims, alls I know is what the paper says. And the papers says $300 million... the Californi Attorney man wants $300 million.

Now all of those things called  "Class Action Claims"  lets see now ...here if some of  'em.

Spahn v. EDJ

Enriquez v. EDJ

Pasik v. EDJ

And then those smart men from some place called The Stanford Law School put together this here report

http://securities.stanford.edu/1029/EDJCL04-01/

Looks like those class actions laywers want to take all that money... nearly $100 million per year that those fancy talkin GeePees took from those mutual funds and give it back to the good folks that bought that stuff.  Lets see $100 million times 5 years....I get $500 million.  What do y'all come up with?

Lets see the paper say the Californi Attorney man wants $300..And then those fun lovin plaintif boys with those class actions claims want $500 million.  mmmmmmmm...thats $800 million what did y'all come up with?

Now lets see EDJ boys got an extra $400 million but the gussied up lawyers might get $800...maybe I am not a numbers man...there ain't enough money for everybody.

Gee this math is fun.  Maybe I am a Numbers Man!

Hopes this helps y'all.

Love

Lance

NO where did the CA AG say HE wants the 300 million. He felt that 300 million was earned by rev sharing. No one has decleared the proposed value of the class actions. Again, show me where you get the numbers?

Guest 1 ...you are a stubborn silly little Jonesie now aren't ya! But I have  so much fun aggravatin y'all!  Especially a goofy boy with that one big ear and that nose a smiggen off center like ya got! 

You ain't payin no attention what I am sayin'. And I what I am sayin' is that NO ONE knows what is going to happen with all these fancy court proceedings.

All I know is IF ANY of those gussied up plaintiff lawyers or that Californi man get a big judgement againt the Edward D. Jones company y'all are in a whole bunch of trouble with those nice SIPC folks.  Now that ain't my opinion that just what the law says.

Now I showed' y'all how that could happen - but is sounds to me like ya convinced yoselves that ya' got nothin' to worry about.  Ain't that a lot like playin' with yoselves (feels good when no ones watchin ya... but it aint real) 

And as I said before this is only what we all know, its whatsja don't know that will nuke ya'.

I think there might somethin BIG cummin at y'all and y'all only got about $400 mill to play with.  Is that enough? ONLY THE SHADOW KNOWS

Lance yop are so fiull of yourself. You are quick to point out when someone makes a claim that can not be validated and yet that is all you do. You stated $800,000,000 in fines/lawsuits… Gee, the SEC and FEDS get 75mill and yet you think the plantiffs lawyers and CA AG will get 800mill ! Give me some of what you are smokin to go with my koolaide. You’re good at insulting others but I think you are the one that is the joke.

Got ya' all riled up now!

Yo sure are a funny boy!

Riled up? Don’t think so. Just good at spotting BS and I m seeing it with you. many on this board have negative feeling towards Jones, and that is ok. But at least when Zacko and a few others post, they speak the trust and not what they WISHED would happen. That is what you are doing here. Are you even in this business? Are you any good at it? Thought so…

I ain't a wishin' nothin' on nobody.  I am only tellin y'all what could happen....sounds to me like yo the one that be wishin' son!

But yo right about a couple of things.

I am not even in the busines, I don't know nothin' about any of those fancy net capital computations or those customer reserve reconcilliations, or that Federal Reserve Regulation T Requirements or those real confusin NASD Rules of Fair Practice. And I certainly do not know how to predict the outcome of a real big law suit like y'all can!

And even if I was in the business I wouldn't be any good at CONvincin nice people to trust me with their life savins like y'all.  I would be terrible at tellin' those people the truth.

Right now it sounds like EDJ plan is a lot of hope!  And I got to tell you Son...Hope ain't much of a plan.

fancy net capital computations? reserves? reg T… Yeah, that is heady stuff alright. What if the 75mill was off balance sheet reserves?.. Hmm would that mess up yOur fancy computations. IT’S THE CAPITAL STUPID!  You can’t even get that right…

Off Balance Sheet Reserves!..That sounds like Enron!   What else those boys hidin’ in dem der Off Balance Sheet Reserves!

I think this is the longest thread we’ve had and I got the ball rollin’!!!

Hee, hee....uwec86 said "ball"

Guest1 - save your breath.  You don't sound like a broker so stay out of this.  I am a broker.  The reality of it is (like I said before) EDJ (GP's) have done serious harm to the firm.  Having said that, for anyone to suggest that there is any way anyone in any posistion of authority would allow EDJ to be fined into (basically) closing their doors is ludicrous.  An 800 million dollar fine is no good for Jones, their clients, the MFD firms or the NASD who was aware of revenue sharing from the get go.  I think we will have our collective drawers dropped, get our butts spanked, and have to explain to clients and prospects what's going on for some time. It's as though the regulatory powers that be are astonished at the ENTIRE process of revenue sharing from its logisitics to its disclosure since the beginning.   

Dharia



That is a silly argument. Have you every heard of that great financial institution with its thousands of employees and tens of thousands of clients…General American? DEAD! And they had a lot more capital and assets than EDJ does. The courts and regulators do not care about ALLOWING things to happen…they would rather see a larger company fail. The NASD is all about rule enforcement is does not care about firm survival…only customer protection.



How about the DOJ? They put Arthur Andersen out -the worlds largest accounting firm. Do you know what AA thought? AA thought that they were above the law! Kinda like those goofy Geeps in St Louis lyin’ to the SEC.



Again, my position is that EDJ is in a very precarious position and if I were an EDJ broker I would worry about your credibility with your clients and plan to exit ASAP…afterall its the clients that are payin y’all not the goofie HOmies!







How 'bout Drexel Burnham…DEAD!

Is there anyway to killfile someone on this board?

what is “killfile”?

[quote=Lance Legstrong]what is "killfile"?[/quote]

I dunno but it doesn't sound too friendly....lol

Edward Jones has been hiring 200 brokers per month for several years, at least 10 years.  That’s 2,400 per year, 24,000 in 10 years.  After 5 years, 8 out of 10 are no longer with the firm.  Beware investors, you may be a lab rat for a soon to fail door to door salesman.  

[quote=Jonestown]Edward Jones has been hiring 200 brokers per month for several years, at least 10 years.  That's 2,400 per year, 24,000 in 10 years.  After 5 years, 8 out of 10 are no longer with the firm.  Beware investors, you may be a lab rat for a soon to fail door to door salesman.  [/quote]

"Just follow the recipe and you will be successful"  Sounds like a great idea for a T-shirt 

Shouldn’t that read, “Just follow the recipe and Jones will be successful?”

John Hickey, executive director of Missouri Progressive Vote Coalition, knocks on the door of the Edward Jones building Tuesday in Maryland Heights, where the broker does TV broadcasts to its affiliates. Hickey was trying to present a letter to managing partner Douglas Hill protesting the company's support of privatizing Social Security.
(J.B. Forbes/P-D)

Alternate Captions Doug Hill Knocks on the door of the Edward Jones building mumbling "I thought I had a whole year to clean out my desk"

A new Jones Broker in Maryland Heights won the Prospector Award for being the first broker to ever cold call the home office.

Edward Jones brokers who "wash out" are required to personally return sales posters and, as an incentive, are given cool cab driver hats.

A shareholder of Putnam Voyager knocks on the door of Edward Jones to request and updated prospectus which is expected to include the "kickback stuff" 

09/02/05 - News and city section

City broker claims £188,000 over 'anti-Semitism'
By James Rossiter City Correspondent, Evening Standard

A former employee of a City stockbroker is claiming £188,000 compensation for alleged racial discrimination.

Samuel Jacobs, 34, who is of Jewish origin, is claiming constructive dismissal against the firm Edward Jones which has 9,000 offices around the world and a turnover of £1.3billion.

According to documents submitted to an industrial tribunal, he says the company failed to investigate "complaints relating to anti-Semitic remarks". Mr

Jacobs has also made allegations of money laundering.

He is reported to have complained to the Financial Services Authority about UK money laundering and stated that "everyone has laundered some money at some time or another".

Edward Jones denies all the claims.

Mr Jacobs left the firm in November 2003 and sued in February last year.

Social Security should survive, but plan ahead, speakers say

Feb 9, 2005

Nothing is going to change right now.

But before Congress alters Social Security, area stock brokers are encouraging Yumans to plan for retirement.

Three area investment representatives with Edward Jones hosted a free, one-hour satellite broadcast, "The Future of Social Security," at their offices on Tuesday.

The educational program was open to anyone, said Charles Cordery, investment representative with Edward Jones.

"We do try to keep people informed," he said. "And we are hearing a lot right now about Social Security."

How about a nationwide broadcast on "How to determine what you are being charged by a broker, and where does his loyalty lie"

Attention Business Editors:

self-regulatory organization and representative of the securities industry.
The IDA’s mission is to protect investors and enhance the efficiency and
competitiveness of the Canadian capital markets. The IDA enforces rules and
regulations regarding the sales, business and financial practices of its
Member firms and its approved persons. Investigating complaints and
disciplining Members and approved persons is part of the IDA’s regulatory
role.

Does anyone know how much EJ has in AUM?

The last I read the averaged approx 25 mil/ broker it was in some broker magazine. 

Jonestown:

A couple definitions by Webster:

1. envy
Pronunciation: 'en-vE
Function: noun

Definition:

Painful or resentful awareness of an ADVANTAGE enjoyed by another joined with a desire to possess the same ADVANTAGE.

2. jealous
Pronunciation: 'je-l&s
Function: adjective

Definition:

Hostile toward a rival or one believed to enjoy an ADVANTAGE.

Truculent: 1. Having or showing an eagerness to fight: bellicose, belligerent, combative, contentious, hostile, militant, pugnacious, quarrelsome, scrappy, warlike. See ATTACK.

2. So sharp as to cause mental pain: acerbic, acid, acidic, acrid, astringent, biting, caustic, corrosive, cutting, mordacious, mordant, pungent, scathing, sharp, slashing, stinging, trenchant, vitriolic. See ATTACK, RESPECT.

3. Showing or suggesting a disposition to be violently destructive without scruple or restraint: barbarous, bestial, cruel, fell2, feral, ferocious, fierce, inhuman, savage, vicious, wolfish. See KIND.

I guess Big Pay Day changed his name to Webster.  I guess his GP was monitoring his posts and this forced him to change names.  Doesn’t matter because he is still pretty dumb.

Edward Jones, a financial services company based in St. Louis, Mo., is seeking investment advisers to set up offices in the Twin Cities area.

John Murphy, an investment adviser in West St. Paul, said the company wants to open 100 two-person offices in the next three to five years. An office would have an adviser and an office manager, doing business with individual investors and small business.

"We are a company that is growing," he said. "We find a lot of call for one-on-one service."

Since he joined the company in 1998, the number of offices has more than doubled to 8,000, mostly in the United States. There are 90 offices in the Minneapolis-St. Paul area.

"Folks that have an entrepreneurial spirit tend to be the most successful," Murphy said. "We tend to look for folks who can operate like their own boss."

Up to a point. The investment advisers are all employees of Edward Jones, not franchisees. The company sets up the office, hires an assistant and gets the brokers up and running. "The person coming in does not borrow a dime," he said.

The new hires are on the payroll as they study for the securities licensing exam. They'll also attend a series of training classes and have mentors in St. Louis.

In the first year, there is a guaranteed annual base salary of $24,000, with a bonus and commissions on new accounts. After that, it is entirely a commissioned position. By the third year, advisers typically make between $61,000 and $72,000. By the fifth year, advisers are expected to make between $92,000 and $102,000.

If interested, call Murphy at 651-455-0319. For more information or to apply, go to www.jonesopportunity.com.

http://www.twincities.com/mld/twincities/business/10869431.h tm?1c

Jonestown:

A couple definitions by Webster:

1. envy
Pronunciation: 'en-vE
Function: noun

Definition:

Painful or resentful awareness of an ADVANTAGE enjoyed by another joined with a desire to possess the same ADVANTAGE.

2. jealous
Pronunciation: 'je-l&s
Function: adjective

Definition:

Hostile toward a rival or one believed to enjoy an ADVANTAGE.

"Folks that have an entrepreneurial spirit tend to be the most successful," Murphy said. "We tend to look for folks who can operate like their own boss."

Up to a point. The investment advisers are all employees of Edward Jones, not franchisees. The company sets up the office, hires an assistant and gets the brokers up and running. "The person coming in does not borrow a dime," he said.

In other words you can pretend to be your own boss....and here's your list of funds bub....

Let me ask this question… Since I work at Jones and opt not to sell just preferred funds what can they do to me?  As long as I continue to excell, and run my business clean, I don’t see a thing that they could do to me. 

They can't do anything.  You are correct.  Pick whatever funds U like the best and use those.  A few might be preferred...and a few may not.  I wouldn't go out of my way not to use them as there are a few respectable families with good funds among the choices at Jones.

[quote=zacko]

They can’t do anything. You are correct. Pick whatever funds U like the best and use those. A few might be preferred…and a few may not. I wouldn’t go out of my way not to use them as there are a few respectable families with good funds among the choices at Jones.

I use Templeton Foreign fund and Cundill Global value for overseas.

I use Lord Abbett all Value as well Van Kampen Growth and Income

I use Federated Kaufmann and Putnam New Value.  I used Federated's market opportunity as well as their muni-advantage.(new fund but I like it)

I use Nuveen High Yield Muni (great fund for a bond fund)

For small cap I am using mainstay.  Oh, I also have used Franklin Income fund although not as much lately.  I also used Lord Abbett for Balanced

I hardly ever use only one family for a client.  I use a fair amount of C shares unless the dollar amount is large than we use A shares to achieve breakpoints.  Avoid B when possible.

There you have it--Zacko the Mutual fund expert.

For all your railing against the “preferred funds” you seem to use a lot of them…

http://www.stltoday.com/stltoday/business/columnists.nsf/dav idnicklaus/story/1E523A7A74D1039386256FAA0037D92E?OpenDocume nt&Headline=Missouri+bill+might+give+MOST+to+the+brokers

As the Legislature takes up Scott's bill, one important industry player is on the sidelines. Edward Jones, a brokerage firm based in Des Peres, was penalized $75 million recently for failing to adequately disclose revenue-sharing payments from its preferred mutual fund families. Among those families were American Funds and Putnam Funds, whose Virginia and Ohio college-savings plans were sold extensively by Jones brokers.

Edward Jones has dozens of offices in Missouri, but MOST isn't on the list of products its brokers make available. http://www.missourimost.org/ 

In the past, the company's lobbyists led the push to extend Missouri's tax breaks to out-of-state plans. In light of the regulatory settlement, spokeswoman Mary Beth Heying said, the firm isn't commenting on the issue now.

The company's case, along with the mutual fund industry's market-timing and late-trading scandals, should be reason enough to avoid changing Missouri's clean, successful college-savings plan. If the Legislature must tinker, let's hope Steelman succeeds in including meaningful protection for investors.

It appears Missouri has an inexpensive, well managed option for college savings 529, but Edward Jones won't offer it to its clients.  Investors should do more homework before buying.   

Jonestown, just how many no-loads do you offer your clients that are not wrapped by a fee or otherwise compensate you? Jones is in business to make a profit. Read the ad for MOST, bet you haven’t. MOST is a pure no-load play on 529’s, good for some not good for others. I don’t see a granmother sending a 110k check through the mail to MOST. But she will write a check at your desk or mine…

Some securities firms are happy to sell MOST, earning a modest commission. But others push out-of-state plans that pay them more lucratively. The National Association of Securities Dealers has expressed concern that many brokers are selling out-of-state college plans to investors who might be served better by their home-state plan.

How 'bout you go read the article so you can understand the issue.

why all the value funds zacko?

i take that back, i missed the van kampen G&I.  regardless, i think there are better foreign funds than that cundill global, at least many that are cheaper.  and i’ve never liked federated, again a very expensive fund (1.95%) that’s getting too big to do what it is intended to do.  Also, have you looked into Oppenheimer Rochester National Muni, yielding over 7%!  I also dislike the mainstay stuff, we’ve been using oppenheimer small cap value and munder s.c. value.  we used sentinel small cap in the past, but then the manager left and took his whole team with him, so we moved people quickly out of that.  does anyone else ever use Davis NY venture?  i have a few times, but alot of the older guys in my office love it.

<SPAN =style9>American Funds Accused of Paying Kickbacks to Brokers (Update1) <SPAN =style5>

Feb. 16 (Bloomberg) -- American Funds Distributors Inc., a unit of Capital Group Cos., paid brokers $100 million in commissions over three years as a reward for past mutual fund sales and to win future business, the NASD said.

http://quote.bloomberg.com/apps/news?pid=10000006&sid=ap q_736HWPpc&refer=home

This could finally end "shelf space" payments, disclosed or otherwise.

Jonestown, read the MOST website. It is a no-load and quotes that we do not pay brokers.

Jonestown: Current career : ClipArtist

Have you ever had your own thoughts?

what is your point Guest 1?  Jones sells the highest commission product that is available to them.  That is the end of the story.

Let’s see if American Funds scraps the revenue sharing program then the other 6 funds will follow suit because we all know Jones is a subsidiary of American Funds.  I can see about $100 million reasons to be concerned.

A couple definitions from Webster:

en·vy
Pronunciation: 'en-vE
Function: noun

Ppainful or resentful awareness of an advantage enjoyed by another joined with a desire to possess the same advantage.

Hostile toward a rival or one believed to enjoy an advantage.

This seems to be the place to “slam” EJ. Here’s one that has REALLY pi**ed me off a few times. Anyone else on this forum had transfer notices to Ed Jones where the instrux. were to “liquidate” the acct. and deliver the “cash”? This seems to be an insidious ploy to somehow skirt an issue on fund switching. How convenient to have “new” money show up where the EJ broker can invest this “new” money in one of the magnificent seven for a (newmoneypreferredfunddiversificationtrip). Not only one EJ broker,but several diff. ones. Must be something they learn to do on their “winning trips”. 

Let's set the record straight. American Funds is cited primarily for directed brokerage. The article insinuates that its largest dealers participated to the tune of 100M. Well folks, do I need to explain who the largest is...EDJ. According to the SEC agreement, EDJ did participate with three fund families.

Separate and distinct is "Revenue Sharing" which  is an industry practice. In my opinion, it needs to be banned by all the regulatory agencies (as directed brokerage is now). It creates an image that every investment rep from any firm steers their clients to funds that payback the reps. Most firms keep all the money. EDJ does share (who knows what percent) with the reps. The IR's slice is very slim. But the effect is in the pyche of the client and prospects (and inquiring IR's) who question our integrity. That's the real damage. Destroying the trust that we work so diligently to build. It's one thing to screw up your own career. It's another thing entirely when you are having to defend the real profiters of the company, the GP's. It's all about greed. Certainly, the individual investor is important...too. Just ask Bill Lockyer.

Well spoken 7yr vet.  Jone has no credibility at this point and they never should have. 

"A "housecleaning," as Cerulli Associates' Dennis Gallant puts it, has already begun.  Cerulli reported a reduction in advisors in 2004 over 2003 at independent broker-dealers, wirehouses, insurance broker-dealers and regionals."

"It represents the first decline since Cerulli began tracking the category five years ago." 

"It's been at least 15 years since the industry has witnessed a fall in advisor numbers."

"For his part, Roame expects "somewhat less" than half of advisors will survive the new environment.  And Sullivan says one need only look to the United Kingdom to get a picture of what lies ahead."

"In 1995, there were 300,000 financial advisors in Great Britain.  Today, according to Sullivan, there are 44,000"

  http://www.researchmag.com/articles/pdf/rb05_cs.pdf

12 predictions for our industry...many already true....

http://www.strategiccoach.com/downloads/prb_12Predictions.pd f

Do they make these in "Settle~Mints"

Jonestown:

Excellent post.  I agree with 11 of those 12 predictions.

If Edward Jones survived ALL of their lawsuits, the changing industry would still ensure their extinction.  Their vacuous platform allows them nothing BUT a commoditized process.

This environment will get challenging enough for those who HAVE the tools, and the ability to create their own unique processes.  How do you survive when you are limited in the processes that the industry already views as commoditized??

[quote=illuminati]

If Edward Jones survived ALL of their lawsuits, the changing industry would still ensure their extinction.  Their vacuous platform allows them nothing BUT a commoditized process.

This environment will get challenging enough for those who HAVE the tools, and the ability to create their own unique processes.  How do you survive when you are limited in the processes that the industry already views as commoditized??

[/quote]

I agree.  The brainwashing that the IRs get and the "follow the recipe and don't question it" mentality that they have, ensures EJ that their IRs will never be able to think outside the box.  That's exactly what the GPs are after.

Those guys don't stand a chance if put into a situation where they have to think strategically.  Besides, most of them don't have the training necessary to do so. 

Weren’t you originally a Jones broker? It would seem to me that therefore your argument is based on flawed logic. Of course, that is thinking outside the box I guess… I love how a person with limited intelligence resorts to generalization, it makes it easier for them.

We are not going to see a ban on revenue sharing. If they did that in our industry it would need to hit every single industry out there that has it. Type in revenue sharing into a search engine. Typically you do not even get to mutual funds until page 2 or more. revenue sharing has existed for decades in most all industries.

 What I would expect to change is how it is allocated to the individual IR. Most firms, read all relevent size firms, revenue share. The difference at Jones is they pay the IR with it. Other firms sweep it into the coffers of the corporation to be used for general purposes. maybe that will be the case at Jones also. With all the revenue sweeping down to the bottom line, it seems fair to all.

Guest1-

I suspect you are correct. The firm should just take all the revenue sharing if it is generated like all the others. So if I understand your logic...if my child comes home and says that she did something wrong and she says that all the kids on the street are doing it, am I going to respond that it is OK because others do it. NO! It is either wrong or right.  Revenue sharing in the fiduciary business, even if properly disclosed, implies partiality, creates a conflict or potential for one. It is only good for the financial companies (GP's). What really bugs me is the double speak that the firm puts forth regarding the sharing of revenue. They share SO much that we can only guess at the actual split. Yet the website claims we share (it doesn't say unequally)which is technically correct but so far from the reality. 

noggin,

Are you bill fakklin's stand-in .... you're almost as funny/intelligent lol on you generalization comment.  Talk about the pot calling the kettle black (when it comes to generalizations)

guest1,

it's not about revune sharing, it never has been! It's been about disclosure and the "apparent" conflict on interest between the fund companies and your employer used when promoting the funds through trips bonuses etc. That's what your employer settled $75 million for with The NASD, The NYSE, The SEC, the US Postal Service (did I leave anyone out?)

Unfortunately, my biggest gripe is, "I'm not a gp, a top producer, or LP".  I hate the way the GP's skirt around the issues of what they've done to the firm...they, in my mind, have ruined one of the best firms in the industry...ruined it...Ted, not that I ever met him, is probably turning in his grave with all of this.  A few greedy sob's..."everyone does it....there will be other firms who this will hit next...we've done nothing wrong...Unfortunately, we the brokers, have to face our clients on a daily basis, sit next to them at church, ballgames..etc...all while the GP's are in St Louis or on some vacation scheming the next money maker..do they make money on the gift catalogs...mailers....You just can't trust them...who wants to work Saturday promo's or Tuesday night promo's,,,,to put more money in the pockets of the GP"s..

[quote=speakeasy]

Unfortunately, my biggest gripe is, "I'm not a gp, a top producer, or LP".  I hate the way the GP's skirt around the issues of what they've done to the firm...they, in my mind, have ruined one of the best firms in the industry...ruined it...Ted, not that I ever met him, is probably turning in his grave with all of this.  A few greedy sob's..."everyone does it....there will be other firms who this will hit next...we've done nothing wrong...Unfortunately, we the brokers, have to face our clients on a daily basis, sit next to them at church, ballgames..etc...all while the GP's are in St Louis or on some vacation scheming the next money maker..do they make money on the gift catalogs...mailers....You just can't trust them...who wants to work Saturday promo's or Tuesday night promo's,,,,to put more money in the pockets of the GP"s..

[/quote]

Can I hear an AMEN????

XEJ, I agree.. It is alla bout disclosure. My post was in response to an earlier one that stated revenue sharing will go away after all this.

7yr, your post is wrong on so many counts, I won't bother. You are a bit disgruntled eh? I asked before, why don't you leave?

Speak, I am an LP and top producer and still work the occasional Saturday. Not for the "greedy GPs" as you out it. I frequently have my best day of the week on Saturdays. I do it for me, not the GPs.

I very well may. Consistent with so many posts that indicate if you ask questions, you must be a malcontent. Questioning is what made this country what it is. Free. I am free to think and feel as I wish. Many of my colleagues at EDJ apparently agree. I guess the question is are you better off somewhere else. The truth is I don’t know. I know the Indy’s of the world will tell me I am crazy for staying. I can’t see myself joining for the dough at the wirehouses. I do thank the GP’s for opening the discussion. I have a guestion for you, Guest 1. You have been around at least 8-10 years, I imagine you have built a pretty nice book to be a top producer. How will you slow down? What equity have you built in your practice? How do you transition or can you? To me that is the real hurdle to overcome going forward.

7yrvet,

PM me and I'll send you a little spreadsheet that will help you.

Interesting to note, the big producers who have left Jones in the previous year, why have none of them gone indy? I have ran a lot of numbers, and indy makes sense for me in some ways and not in some others. My payout on the upper level is pretty close to what the RJFS, LPL guys told me to expect. (I posted that number in a fidderent thread) 7yr, ask this board, who has seen a business sold and for what price? Don’t fall back on that one. Unless you run a very large fee based business, and you are not at Jones, your book is not worth what you would like. Don’t know what the answer is 7yr for retirement but then, neither do the indies. (they just won’t admit it)

Guest1,

I don't think your perceptions are accurate.  I recently went back and looked at my net/net at Jones with gross between 600 and 800k over several years and comapred it against my time at RJ.

The Jones numbers don't even come close.  In one year where the bonus brackets were high....it was closer.  But still over a 100k difference in favor of indy. 

The reason Guest1 that some choose to go to the wirehouses or banks is for the front money.  Brokers tend to be blinded by the big check.  I turned down nearly 900k myself to go indy instead.  In the long run--you come out ahead.   It's simple math.... 

My answer for retirement is that I will have many more choices and options than you will have at Jones.

Zacko-

Is Guest1 argument regarding equity in business accurate now that you have made the move to RJ? What really is your biz worth (% of 12 month trailing)? Is the Jones model (primarily mutual funds) very little recurring revenue other than 12b-1 fees, worth anything? Or are Guest1's comments accurate unless fee based, not much to sell. On that note do you know of books that people acutally pay for?So far all I have heard is that books are paid in installments, usually a small down and then paid from revenues for a period of years. Interestingly, I have heard that EDJ is adopting some form of this. On a case by case situation. Nothing formal or published. Your point of more choices...is that because you make more %? Please expand.

7yr,  Good question.  The bottom line is your book does has value...Here is what I am doing.

I am in the process of setting up a buy/sell agreement in case I die and my wife will get 1 million dollars and a friend of mine will get my business.  There is a letter going out to clients if I should pass on that explains this (Hopefully the letter never gets sent) to them in a comforting fashion.

Also, I have a couple of kids.  I have the flexibility of bringing either one of my kids in at some point in the future and retiring while still recieving a payout on the book.  I can also bring in a partner and sell the business...and you are right--it's always done over installments or a payout over a period of time.  Fee based is worth more...but it depends upon the quality of the book as well.

As a branch manager, I can also hire brokers, supervise them and recieve a payout on their trades.  I haven't done it yet...but I can.  I will probably do that at some point.  Compare that to the goodknight program where you give someone 5-10 million AUM and create a competitor with another office down the street.

Jones has been talking about a severance package for YEARS with....nothing coming as a result.  If you die...your wife gets a term policy worth a 100k and the locks get changed at the office.  There is also no written guarantee that she will get to keep any partnership.  It is all at the managing partner's discretion.  No thanks!

You have flexibility and choices when you own the business--and you don't when you are an employee.  That's the difference.  It goes well beyond a higher payout, better technology, and more products to offer to your clients.

Hope that helps you some.

Remember Our Top VA Producer? He's Independent Now
Magazine: On Wall Street, April 2004

By Rebecca McReynolds

The last time we checked in with Wayne Dictor and partner Steve Martin, the two were happily ensconced at UBS PaineWebber in Sarasota, Fla. Dictor, who had spent 12 years with Dean Witter before joining PaineWebber, was the office's insurance coordinator. Martin was the administrative half of the team. The partnership focused on wealthy retirees, did few transactions, but lots of comprehensive planning and wealth management.

"When UBS took over, they told us they would keep PaineWebber just as it was," Dictor recalls. As reflected by the name changes to UBS PaineWebber and then to UBS, he said the bank's involvement kept expanding. While he says they didn't push proprietary product, they did encourage the firm's brokers to become more credit oriented.

"If it's appropriate, I'll ask my clients about their mortgage," Dictor says, "but many of my clients don't have mortgages and I didn't want to be a mortgage officer. In the same vein, UBS boasted about its international lending strength. That's all true, but how often does one of my clients need a $50 million loan linked to LIBOR?"

Growing frustrated, Dictor and Martin decided to look into independence. The process consumed 18 months of research, analysis and in-person tire kicking. They decided they wanted a truly independent firm, not one affiliated with a big bank or a wirehouse; they wanted to leave that environment. At the same time, they wanted a firm that could handle the specialized needs of high-net-worth clients.

"We wanted to make sure we were going somewhere that could support us in delivering high-quality investments, due diligence and legal oversight, but one that made it cost effective, cost efficient and gave us the latitude to look at a broad array of investment and insurance products," he says.

While attracted to Raymond James, which met their requirements, the pair felt the firm's dominant local presence wouldn't set them apart. Instead, they went with Linsco/Private Ledger, which had no other independent reps in the area and offered a product mix and technology support that Dictor says is equal to or better than what they had at UBS.

"LPL's insurance offerings are far better, but what truly clinched it was when we spent two days in San Diego," Dictor recalls. "I was introduced to Todd Robinson, the chairman of the firm, who said he knew me from the OWS cover story. I couldn't believe it; in the seven-plus years I was with PaineWebber, none of the top executives ever met me, let alone knew me. Then Todd told us he wanted to work with us and that his goal was to make us their happiest customers. At PaineWebber, I never felt I was their customer. I was their lackey."

With LPL providing back-office support, Dictor and Martin leased offices in "the most exclusive piece of real estate in Sarasota" -- the 1 Sarasota Tower Building, right across the street from the Ritz-Carlton Hotel. Setting up the 2,000 sq. ft. office cost more than $60,000.

After identifying the top 70 clients out of their book of about 150 families they wanted to bring with them, the team got ready to move. (While Martin was bound by a non-solicitation agreement that forbade him from doing business in a 50-mile radius of the UBS office, Dictor got PaineWebber to forego such an agreement when he was hired because they wanted him as a managed accounts coordinator.)

The day before Thanksgiving, Dictor performed his annual ritual of handing out Amish pies to his colleagues. At the branch manager's office, the pie was accompanied by a resignation letter.

As Dictor was driving from his old office to the new one, a client called Dictor's cell phone to find out what was going on. It seems that in those few minutes, another PaineWebber broker already had called the client.
"The departure was brutal. The firm was offering to waive all their fees for a certain period of time, and they even sent out copies of newspaper articles that warned readers about rogue brokers -- without using our names, of course," recalls Dictor, who wasn't worried. "People don't change doctors because one down the street charges 25 percent less. Clients know what they want, and our clients had built a relationship with us."

Dictor said that 68 of the 70 targeted clients came with them. Do any of them miss the large-firm environment?

"Our business was always based on referrals, and we had one very large client who never gave us any, even when we asked. When we went independent, he sent us referrals. He told us that although he thought we did a good job, he only referred professionals who worked for themselves. He perceived PaineWebber as a Wal-Mart. Now he perceives us as having a vested interest in our own company's success."

As Dictor is wont to say, perception is everything.

Zacko, I have ran them. Running this year at 60% after all inclusive. I have well over 200k in LP, it must be looked at also since I paid (yes paid) for it with pennies on the dollar. Even without the LP I am well above 55%. Zacko, a buy-sell agreement is NOT valuing your practice. The only difference between that and me buying a policy is that your preium is tax-deductable. (although, I could structure mine to be a tax deduction). WHAT IS YOUR BOOK WORTH RIGHT NOW IF YOU SEL it? You don't know, do you? See, the indies are forever saying they own their book, so what in the above example. There are many reasons why indy is best for some, but I have yet heard of ANY book going for much.

Zacko, what does the above comment regarding too many RJFS offices nearby to be successful mean? Do you not stand out? Even in Jonesland, many of us stand out in our communities.

Good points Guest1.

<SPAN =line>Market Watch

<SPAN =deck>Whether you’re buying, selling, or building, the more you listen to what the market for advisory practices is telling you, the more valuable your practice will be.

<SPAN =byline>By David Grau

<SPAN =storydate>April 1, 2003- <SPAN =content>Sometimes things don’t turn out the way you plan. When we launched FP Transitions just over three years ago, our goal was to help the growing number of advisers who were reaching retirement age find qualified buyers for their practices and facilitate those sales with a confidential listing system, legal documents, and financing arrangements. But as the market we created has grown (2,166 buyers and 142 sellers were listed on our Web site in 2002), and the economy has struggled, we’ve seen an increasing number of younger advisers transition out of the profession, as well as an avalanche of buyers who see acquiring existing practices as an opportunity to replace revenues lost to the current bear market.

We've also realized the information we're gathering from the hundreds of transactions we facilitate each year and the thousands of buyers and sellers listed on our site, FPtransitions.com, is almost as valuable as the services we offer to advisers. Each year, we package this market intelligence in our annual Practice Transitions Report. In the 2003 report, we explore the current trend toward younger sellers and more experienced buyers.

It seems the struggling bear market is once again taking a toll on advisers who prefer not to deal with this kind of intense volatility periodically throughout their careers. And yet, even though the number of sellers today is up, the number of buyers is up more, driving up the value of practices, supporting price to revenue multiples, increasing down payments, and bringing the number of sellers who close deals to over 90%. In fact, contrary to what you might think, our data shows that now may be the best time we've seen yet to sell an advisory practice -- and even better if you're an established, successful financial planner.

To help you create value in your practice, each month we'll tell you exactly what the market for advisory practices is telling us. From profiles of successful buyers and sellers to why some deals fall through, we'll keep you abreast of trends in the marketplace, cutting-edge transition strategies, and keys to building and realizing value in your practice.

The messages that the markets send are often surprising. For instance, did you know that:

If you didn't know these things, don't feel bad. Neither did we. In fact, over the years our data has revealed that when the stock market goes down, the value of advisory practices actually goes up, thanks to the increased demand from advisers to replace lost revenues.

What's more, sellers in down markets get an added boost because most practices are sold on an earn-out basis. Their depressed revenues are more likely to increase in the next few years than they would have following boom years, when the only place to go is down. And while older, more established firms have been reluctant to sell lately, they've been more than replaced by younger advisers leaving the business.

Here are a few of the topics we'll cover in future columns:

We think these stories will make you a more sophisticated buyer, seller, or builder of an advisory practice. At the very least, you'll give yourself the best chance to succeed.

David Grau is president of Business Transitions in Portland, Ore, a leading facilitator of buying and selling advisory, accounting, and insurance practices on its Web sites: FPtransitions.com, CPAtransitions.com, and Insurancetransitions.com.

Jonestown, let's try and find something recent shall we?

Look at the website today. Inquires are high, sales are low. Hmmm.

"See, the indies are forever saying they own their book, so what in the above example. There are many reasons why indy is best for some, but I have yet heard of ANY book going for much." ...Guest1

..you keep your head in the sand and you won't hear a thing. 

Nice diversion from the question. What, no 3 year old news article to print?

Jonestown, you are not worth a damn unless you can copy someone elses article on here. Have you ever posted more than a sentence or two of your own thoughts? Funny, folks are always slamming the Jones brokers for not thinking for themselves yet, Jonestown can only copy and paste. Step aside Jonestown and let a REP answer the questions.

I think it's best that you stay employed with Edward Jones.  You'll be just fine.

It's impossible to know if that kind of disclosure will change investor behavior, but it will certainly give us all a better look at just what's driving the motivation of different dealers and their brokers. At least for now, though, customers of Edward Jones have some idea of what they're facing. If you're one of them, and your broker comes calling to switch you from one of the American Funds to an offering from Hartford--whose funds have generally performed less impressively over the years--don't be afraid to put on your most skeptical game face. Edward Jones may be getting paid, but you definitely don't have to play.

http://www.forbes.com/finance/feeds/mstar/2005/02/24/mstar1_ 2_20871_132.html

Some things are worth reposting...enjoy

Looking for the Secrets to Success. Motivational presentation by Edward D. Jones Investments. Sponsored by New Castle County Chamber of Commerce. 11:30 a.m.-1 p.m. 630 Churchmans Road, Christiana. Free. Registration requested. 798-0900

Hey...this guys gonna tell the secrets!

COOPER: Let's shift gears. When you speak to brokers about changing firms, how much do they know about the state of the broker job market or about other firms? Do they understand the alternatives at regional firms?

WAREHALL: I think each individual is in the middle of his or her own forest. They may claim to know what's going on in the Street but they just know what's going on in their office.

JOHNSON: It's also the firms that are clueless about the other segments of the market. I mean, if you look at how they've handled the Internet and discount brokerage, they had no knowledge of each other. The firms themselves can be very nave.

DIAMOND: The big firms have done a very good job of brainwashing their producers into believing that the reason client A is your client is not because you're a great broker but because they love the Merrill Lynch name or the Morgan Stanley name. And I think a lot of brokers have their nose to the grindstone and don't bother to look elsewhere.

One of the major components of our job as a recruiter is to educate people. Before we sell, we educate about the landscape of the industry and what's out there.

KING: You'll find a lot of brokers who don't know a thing about what's out there. Some are the grandiose types. They talk about a friend getting 400 percent for moving and they want the same deal. Or they want 200 percent plus the cost of their children's college education. Total insanity. But there also are brokers who have a more realistic understanding of the numbers, yet no idea how it all works.

FERBER: I want to make a quick comment on brainwashing. I just talked to someone at Morgan. He's not doing well -- a few hundred thousand. When I spoke about regionals, he said he couldn't give up the Morgan name. If I could have reached through the phone, I would have shaken him by the lapels. He's in a very wealthy market in South Florida and he could talk to Legg Mason or Janney Montgomery, but he won't because he's been brainwashed to think it's a step down. And as far as other brokers know what's out there in terms of deals, most are stuck in the forest.

WAREHALL: I think we all hear things from brokers that blow our minds. They have lots of misperceptions about regionals. The quality of life there can be very good; you can have tremendous technology and a much better corporate culture and working environment.

SARCH: It comes down to knowing your client and knowing your client base. If the broker can't make a compelling argument to his client as to why he should move to a regional firm, then he shouldn't move. But if the client is doing a basic transaction or managed money and little or none of the exotic things, the business can be handled generically somewhere else.

McGINNESS: One thing we've seen is that wirehouse brokers have no idea what it's like or what it takes to become completely independent. I get calls all the time from good producers, people with $50 million books at the wirehouses, who are thinking about it but who don't know the first thing about what's involved in setting up their own RIA. That's one of the reasons some independent firms have put together transition programs.

I can't make it up...I can just copy and paste...links available upon request.

"He's in a very wealthy market in South Florida and he could talk to Legg Mason or Janney Montgomery, but he won't because he's been brainwashed to think it's a step down."

It would be a step down, but it might be one he needs to take if he's doing a couple hundred K a year....

Guest1,  Someone else pays the premium on the buy/sell.  Not me.  And yes, the broker does own the book and have much more flexibility.  So, I sorta will have a sell agreement.  Plus, what about bringing in other brokers?  It's an option--if I so choose.

Also, I get RJ stock options FOR FREE.  Last year, I got 750 shares at a nice discount.

Consider 2002 or 2003--when there was little or no bonus?  You have a great year--and Jones doesn't?  May net/net was barely 40% in 2002.  So , in that year--the difference was about 25 payout percentage points.  My branch consistently had plus or minus...about 300k in profit on P&L.  Clearly, when Jones was in a VERY high bonus bracket...it would make the numbers closer...but not close enough in my view.  I can't speak for your numbers or exactly how your calculating it....but having been indy now for over a year--that is my view.

All I can say is that my disposable income has went up dramatically since going indy.  15-20 points in net/net.  67% was my net/net last year.  Never made close to that at Jones....not once.  But, I did get a veneer and plastic award at the summer regionals every year!  I figure, with all my time at Jones those awards cost me close to a million dollars.  Expensive--but I love em!

Jonestown, you are your own worst enemy.  You get slammed for cut and past with one liners and then you come back with multiple cut and pasts one liners.

 You showed him.

Last week, soon after two Edward Jones offices were targeted with AFL-CIO demonstrations, the St. Louis-based brokerage decided not to renew its membership in the Alliance for Worker Retirement Security, a business coalition that backs Bush’s Social Security plan.

Derrick A. Max, who heads the alliance as well as a separate business coalition pressing the same goal -- the Coalition for the Modernization and Protection of America's Social Security -- said he hasn't lost any members other than Edward Jones. In fact, since Edward Jones's departure, he said that he has gained both members and contributions. He declined to say precisely how many or how much, though he said the extra donations were substantial.

http://www.washingtonpost.com/wp-dyn/articles/A45392-2005Feb 22.html

Does this mean the Rams are really Jinxed....one for you franky.

Jonestown Envy:

A couple of definitions for you:

envy
Pronunciation: 'en-vE
Function: noun

<?:namespace prefix = o ns = "urn:schemas-microsoft-com:office:office" />

Painful or resentful awareness of an advantage enjoyed by another joined with a desire to possess the same advantage.

jealous
Pronunciation: 'je-l&s
Function: adjective

Hostile toward a rival or one believed to enjoy an advantage.

Webster

Anyone hearing any rumors about BAC looking at Jones or AG?  There was an article in the Financial Times that indicated this might be the case.

Truth...We've heard rumors for years here in Jonesland...where's this article?

Financial Times dated either 3/1/05 or 3/2/05.

Truth,

It simply amazes me how infatuated with Jones you are.

You may want to seek counseling.

Call it how you like to, but I see it a bit different.  What I see is someone who gets mighty upset when someone like myself points out the issues.  I guess it goes to show that nothing hurts worse than the truth.  Wow, you have given me a new signoff statement.  Thanks!

____________________________________________
Nothing hurts worse than the truth.

 I’M TEN PLUS YEARS WITH EJ BEEN TP FOR 5 OF THE TEN YEARS,I’M TOTALLY AT A LOSS AT THE UNBELIEVABLE CRAP STL IS TELLING THE IR, AND THAT THE IR BELIEVES IT!!!98% OF FUND SALES WENT TO 7 VENDORS THAT PAID TO PLAY AND THE TWO MOST RECENT ADDITIONS PAY THE MOST  HELLOOOO,THIS IS IN DIRECT VIOLATION OF THE SEC ACT OF 1933, FAVORING ONE INVESTMENT COMPANY OVER ANOTHER BASED ON COMPENSATION.JONES SAYS WRAP ACCOUNT ARE BAD FOR THE CLIENT BUT WE RECEIVE ASSET BASED FEES FROM THESE VENDORS ON THEIR FUNDS IE GOOD FOR GPS BAD FOR IR.LIMIT PRODUCT LIMIT LIABILITY,OPEN PLATFORM LOSE RS, BAD FOR GPS!!! 

Great post FREE.  Simply but direct to the issue at play.  The GPs have been talking out of both sides of their mouth, especially several years ago when fee based business started becoming the lay of the land.  Bachman was forceful in his language regarding how it was bad for the clients.  Ironically fees have been going down dramatically and Bachman was smart enough to know this would hurt him and his other GPs.

Free, interesting comments from a 10yr TP producer. Tell me, did you receive a P/S check this week?

Jones is going to have to start changing with the industry, but I don't think they will wake up. I work for a Regional firm and we underwrite a lot of muni's and sell more than Jones in our area. They always brag to my clients how no one can touch them in their quality of bonds. Give me a break! The IRs are so brain washed. My HNW fee based clients prefer my service and wisdom over Jones. I know what a few of their offices are producing and they'd be out the door at my firm with their production levels.

Good point about the low production levels DEAL.  They have the highest 3-5 year turnover and the reason is because of the open office situation.  The offices have to be staffed within a certain timeframe or they have to close them.  So you will see them keeping someone until the pipeline is full to replace them.

More recently, the 3 to 5 year guy who is having some success leaves to go to RJ or LPL.  They’re getting good, young, fresh faces and Jones is paying the hiring, licensing, and training costs.  No wonder RJ stock is up 50% rolling 12 months.  If Jones were a publicly traded company, what would their stock look like?

If Jones traded publicly there would be some major restructuring and probably some office closings. Shareholders wouldn’t stand for their failing business model and archaic communication systems. The GPs couldn’t BS the analysts like they do the IRs. And I don’t know, would the satellite stay?? How many times was it down last year?

You would never see them going public because the GPs couldn’t take 65+% of profits off of the top like they do know.  I know there are some Jones believers and I respect that, but regardless of what my feelings are the truth is the GPs have not and will not share the truth because they have a money pit going on there.

I should post the email correspondence between my CPA and I that occurred last week.  It went something like this.  I was worried about my final income tax bill....I had already paid 85k for last year.  Also,maxed out retirement plan 58k for wife and I combined plus 8k for assistant.  In addition, wrote everything off I could under the sun.  My CPA asked what I was hoping to pay?  I responded that I was hopeful it would be less than 20k more than what I already paid.  He responded back and said it was about 40k.  I asked why the difference?

Answer was: "Your net income was up almost 200k over last year"

While I didn't get any "gracious" profit sharing overage--I did make a few more pennies by being indy.  While you will enjoy your profit sharing check and bonuses determined by STL profitability...I will enjoy paying the extra taxes any day.

guest, yes i did receive a ps check this week ,as a matter of fact jones has given me approx 80k in ps over the last ten years.Whats the point? 

Free,  thought about making the move to indy lately?

yes,zacko pm me

[quote=zacko]

I should post the email correspondence between my CPA and I that occurred last week.  It went something like this.  I was worried about my final income tax bill....I had already paid 85k for last year.  Also,maxed out retirement plan 58k for wife and I combined plus 8k for assistant.  In addition, wrote everything off I could under the sun.  My CPA asked what I was hoping to pay?  I responded that I was hopeful it would be less than 20k more than what I already paid.  He responded back and said it was about 40k.  I asked why the difference?

Answer was: "Your net income was up almost 200k over last year"

While I didn't get any "gracious" profit sharing overage--I did make a few more pennies by being indy.  While you will enjoy your profit sharing check and bonuses determined by STL profitability...I will enjoy paying the extra taxes any day.

[/quote]

Liar... Windbag!!! "Hey everyone, look at me, I'm the amazing Zacko, I make millions of $$$ per year and instead of living the high life I post here online to puff up my already enormous head even further!"

Wrong....Perhaps I should have PMed the intended recipient guest1--but I replied on the thread to demonstrate the difference between what a larger producer might make at Jones versus indy.  Clearly, you are none of the above.

I don't make millions per year either--but I can assure you it's much more than you bring home dipsh1t.  And thanks for calling me amazing. 

Oh man....possibly my best post yet...scroll to bottom of this link...

http://www.expressgaynews.com/advertising/etearsheets/pdf/03 -19-2004/034.pdf

Inclusion policy at work....

[quote=zacko]

Wrong....Perhaps I should have PMed the intended recipient guest1--but I replied on the thread to demonstrate the difference between what a larger producer might make at Jones versus indy.  Clearly, you are none of the above.

I don't make millions per year either--but I can assure you it's much more than you bring home dipsh1t.  And thanks for calling me amazing. 

[/quote]

Awww, Zacko, did I strike a nerve... You are the biggest windbag on this website and you know it... Your constant ego stroking only exposes you for the fraud you are...

Sleep well little producer...

You like being a big fish in a little pond don’t you Zacko. But in the land of big producers, you are a little fish. Congrats though on achieving uppermiddle class status.   

Zacko speaks the truth!

Zacko, thanks for thinking of me. Who the %$#@ is BlahBlah Blah?

I think you and I share the same tax man! Mine laughed at what I STILL owed! What a business. You have the opportunity (I guess!) to pay at least twice what I grossed at my old job! God Bless America!!