Ej gets fined ...... AGAIN!

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Dec 13, 2006 3:58 pm

http://stlouis.bizjournals.com/stlouis/stories/2006/12/11/da ily34.html?jst=bln_hl


Edward Jones fined by NASD

St. Louis Business Journal - 2:34 PM CST Wednesday

Edward Jones is among four firms facing a total of $850,000 in fines by the NASD, the regulatory organization said Wednesday. The four firms also were ordered to pay an estimated $43.8 million total in remediation to clients.


NASD is a federally mandated private-sector provider of financial regulatory services.


The fines were imposed for the firms' failure to have adequate supervisory systems and procedures to identify opportunities for investors to purchase Class A mutual fund shares at net asset value (NAV), or without a front-end sales charge, according to an NASD release.


NASD said it imposed fines against St. Louis-based Edward D. Jones & Co. LP, $250,000; RBC Dain Rauscher Inc. of Minneapolis, $250,000; Royal Alliance Associates Inc. of New York City, $250,000; and Morgan Stanley DW Inc. of New York City, $100,000.


Each firm also was ordered to provide remediation to thousands of eligible clients who qualified for, but did not receive, the benefit of available NAV transfer programs, NASD said.


Based on estimates provided by each firm, NASD said Edward Jones will pay $25 million, plus interest; RBC Dain Rauscher will pay $6.8 million, plus interest; Royal Alliance will pay $1.6 million, plus interest; and Morgan Stanley will pay $10.4 million, plus interest.


The firms also are required to each retain a third-party examiner to oversee the remediation process.


In settling the matters, each firm neither admitted nor denied the charges, but consented to the entry of NASD's findings.


The firms' failure to adequately supervise the identification and implementation of NAV transfer programs deprived customers of substantial discounts on mutual fund purchases, according to a statement by James Shorris, NASD executive vice president and head of enforcement. "Securities firms must learn all of the relevant pricing features of the fund shares they sell and ensure that eligible investors receive all available discounts and sales charge waivers, without exception," he said.


NASD said that during 2002-2004, many mutual fund families offered NAV transfer programs that eliminated front-end mutual fund sales charges for certain customers. Under an NAV transfer program, customers who redeem fund shares for which they paid a sales charge are permitted to use those proceeds within prescribed time periods to purchase Class A shares of a new mutual fund at NAV, or without paying another sales charge.


NASD said it found that during the 2002-2004 period, each firm failed to have systems reasonably designed to ensure that customers received NAV pricing when appropriate, so certain investors incurred charges they should not have paid or purchased other mutual fund share classes that subjected them to higher fees.


In sanctioning Morgan Stanley, NASD said in it s release that it considered the firm's "prompt and comprehensive remedial actions."

Dec 13, 2006 4:16 pm

http://www.nasd.com



Dec 13, 2006 8:40 pm

Looks like the GPs will have to pay it out of pocket again.

Dec 13, 2006 11:56 pm
rook4123:

Looks like the GPs will have to pay it out of pocket again.



It's ok, they'll have plenty left.

Dec 14, 2006 2:42 pm

Don't forget the coffers are being replenished with new money soon.

Dec 15, 2006 6:28 pm

Based on estimates provided by each firm, NASD said Edward Jones will pay $25 million, plus interest; RBC Dain Rauscher will pay $6.8 million, plus interest; Royal Alliance will pay $1.6 million, plus interest; and Morgan Stanley will pay $10.4 million, plus interest.


More than  half of the remidation total is to be paid by the EJ.... hows the halo fitting now?

Dec 16, 2006 6:27 pm

You bet...NAV'----not for the top producers...I know of a producer who moved everyone out of Putnam when they got into trouble and moved them to another fund family full load!!!!  200k gross..1 month! Now THAT IS selling without a conscience.

Dec 17, 2006 9:06 am

It looks like to Liquidate and Transfer form didn't work so well after all.

Dec 17, 2006 7:15 pm

If you transferred in an account in Canada which held "unapproved" funds, liquidate and repurchase in an "approved" funds is acceptable behavior...

Dec 25, 2006 4:20 pm

hey JohnDoe,


Could you explain this current problem ..........

Dec 26, 2006 7:57 pm
jones&out:

It looks like to Liquidate and Transfer form didn't work so well after all.

Dec 26, 2006 8:01 pm

Have you ever transferred an account without cost basis info? This form, which should be used sparingly, saves the client and myself a serious headache if you are liquidiating an acct.

Dec 26, 2006 8:18 pm
Incredible Hulk:

Have you ever transferred an

account without cost basis info? This form, which should be used sparingly,

saves the client and myself a serious headache if you are liquidiating an

acct.





Cost basis can generally be obtained from the clients' statements. Yours is a

sorry-assed excuse for screwing your customers.



I truly don't know how you sleep nights, Hulk.

Dec 26, 2006 10:14 pm

How many accounts have you transferred in from AGE? ML?

Dec 26, 2006 10:19 pm

I just read your last comment Starka, you are truly pathetic. How do I sleep at night? How does that yahoo broker at AGE keep a client in Putnam Vista, Voyager, & OTC? I'll sell that account out everytime and find an APPROPRIATE allocation. Schmuck. Grow up.

Dec 26, 2006 10:29 pm
Incredible Hulk:

I just read your last comment

Starka, you are truly pathetic. How do I sleep at night? How does that yahoo

broker at AGE keep a client in Putnam Vista, Voyager, & OTC? I'll sell that

account out everytime and find an APPROPRIATE allocation. Schmuck. Grow

up.





Then be a man and liquidate when the funds come over. Why do you feel

the need to hide from compliance behind the L&T form? Answer: Because

you wouldn't know an appropriate allocation if it bit you on the leg.



Dec 26, 2006 10:34 pm

Really, how many accounts have you transferred in? Let's see, a 1099 from AGE with the CORRECT cost basis without any work on the clients part or mine. Do you really think I'd have trouble justifying (sp) this? How about a managed account with 100k in 35 stocks? Should I transfer it in and charge $50 per trade to sell it out? You are very narrow minded and quick tempered. Again, Grow Up.

Dec 26, 2006 10:49 pm

Quick tempered? Over something that you post??? Hardly. (By the way,

your spelling of 'justifying' is correct.)



Why is it more moral to have the client liquidate at the other firm, if in

fact he even knows that he has a choice? Is it right, despite how many

securities are in an account, to force all of the selling into one tax year?

Do you even care about the consequences? Is your contention that ALL of

the securities in the contra account are inferior, and that you are the only

person who knows what to do? Why can't the Putnam Funds be brought

over as is, and then put into a conservative fund within Putnam? Oh,

that's right...you don't get paid. Your actions betray you, Sonny, despite

your protestations to the contrary, and give lie to the Edward Jones

mantra that you're the only ones who care about the client.



Give yourself a couple more years of experience, and you'll see how

pompous and arrogant you seem...and perhaps you'll also see that you

have nothing to be pompous and arrogant about.

Dec 26, 2006 10:52 pm

Oh, and by the way...I've found that contra firms, especially the large, well-

repected firms such as you've mentioned, are open and helpful when called

for cost basis information, particularly when they are asked in a polite,

professional manner.

Dec 26, 2006 11:14 pm

A couple of points and I'm done arguing with you...



Thanks for the spell check.



I had to think about the times I've used the form as it has been awhile. I'll sell every Putnam account out every time. Period. You are doing your clients a disservice if you think that putting them into inferior funds (even if it saves them a couple of points) is a good idea. Find me a report within the last 3 years that ranks Putnam in the top 10 fund managers across the board. I'm not sure they're in the top 20. Would you leave your parents money in putnam?



As for your assertation of Jones mantra about the only firm to care about the client... I dont' know about EDJ, all I know and can control are my own actions.



6 years in the business, 4+ in production certainly doesn't make me a grizzled vet, but I've been around enough to make the comments I have made in this thread with certainty.



Case in point: an account at AGE that came over with Putnam funds dating back 4 or so years in roughly 2003. They were down substantially, (meaning no taxable gain for the slow minded) Dividends paid quarterly and short and long term capital gains were paid annually. When we requested the cost basis, they (AGE) sent the client a spreadsheet with nothing but dates of purchase and those reinvested listed separately with no totals. Can it be done? Sure, is it time consuming? When I have to walk the fine line of not offering tax advice but give them the service they expect, it becomes tedious for me. Right? You may not think so, but I can sleep well.



I've typed too much to proofread, so pardon any mistakes, but you can question EDJ all you want, but keep the personal attacks about MY ethics to yourself.