I Do Not Hate Jones
Some of your goofy Jones boys think I hate Jones, y'all even get mad at me. I do not hate anything. I do try to point out the hypocrisy and inherent conflicts of interest that come with the industry and mix it with a little levity. EDJ and others like AGE just do not want to admit that there is a huge conflict of interest between what is good for the firm, what is good for the broker and what is good for the client. The RR values are easily compromised because it is laughable to think that you can be true to all three parties!
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When you break it down there is really no difference between the firms from the client perspective securities are securities. The differentiation is only at the RR perspective – we are the ones managing the conflict of interest. I maintain that this is virtually impossible to do over time. At least I and a few others on this board acknowledge this!
The biggest mistake anybody in financial services can make is when they start believing that they can walk this line between yield to client, yield to broker and yield to firm. Just ask yourself when you are looking for a 100 bonds for a client. Tell me you are not interested in YTB (yield to broker). Ask the manager of your bond desk how they get rid of bonds – just juice up the sales credit and out they go. The fixed income desk at your firm is filled with the biggest hypocrites in the industry! That mark up comes right out of the clients pocket and into the pockets of the desk, the firm and yours!
The EDJ boys and a few other kids on this board have been intoxicated into thinking that this does not apply to them…which is really laughable. It is just easy for me to have fun with these juiced up Jones boys! An example of this was all of the spin the EDJers put on the $75 million settlement that was reached with US District Attorney (aka The Prosecutor) last year. This was not a fine, it was a settlement with a prosecutor! Here is the real story and time line…
Fall 2003 – John Bachman pens a letter that is published in all of the major newspapers about how Ed Jones is above all of this monkey business dealing with mutual funds…or in so many words; “Please don’t confuse Jones with these other criminals in our industry…” Go ahead and read the letter and sum it up yourself.
Winter 2004 – The Wall Street Journal runs an article about the previously concealed Revenue Sharing practices that Ed Jones was involved in. This triggers an SEC Investigation into the matter.
Summer 2004 – EDJ is under administrative investigation by the SEC. The SEC Division of Enforcement makes a request that EDJ respond to a “Wells Submission”. A Wells Submission is a formal administrative filing that requires a party to definitively answer a series of questions posed by the SEC. Doug Hill et al is faced with a tough decision; If they respond truthfully to the SEC questions then Bachman will look like he lied when he authorized this goofy letter to be published in all of the Newspapers in the fall of 2003. Doug makes the call….and decides not to respond truthfully to some of the SEC questions and actually signs off on it! You can speculate why?
Fall 2004 - The SEC obtain documents that clearly show that Doug Hill knowingly lied when he signed off on the Well Submission. They refer the matter to the Department of Justice (aka Federal Prosecutor) Jim Martin, the US District Attorney in <?:namespace prefix = st1 ns = "urn:schemas-microsoft-com:office:smarttags" />St. Louis takes the referral from the SEC Division of Enforcement. Martin is about to drop a multi-count indictment on Doug and the rest of the Jones boys. Doug freaks out, he realizes that he could be baking cookies with Martha in a Federal Pen if they try to fight this and the firm could be exposed for what many would think are questionable business practices. He decides it is better to settle with the US District Attorney and cough up the $75 million plus resign his post that Bachman hand picked him for. (go team) Read the Settlement - it is a public document that says all of this!
[Doesn’t this sound like a Main Street American Activities that would make your clients proud!]
Winter 04-05 The EDJ spin doctors are busy. They successfully re-cast the settlement as a fine and that the SEC has gone over the top on a Revenue Sharing Witch Hunt. EDJ was a “victim” of over zealous regulators. The brokers who do not want to taste the piss in their punch hold their noses and take a deep breath. They keep doing what they know how to do…pumping those mutual funds. Hoping that it will all blow over!
The big unknown is the outcome of the California AG claim. No one can predict the outcome of this matter. EDJ can not issue LPs with this CA AG claim hanging out there. Which raises an interesting question; “Does the inability to raise capital say that there is already a capital problem?” You can decide that for yourself!
Jones could loose BIG and trigger a capital crisis at the firm. The EDJers think that talk of this is heresy and that I should be burnt at the stake for even thinking that a capital crisis could present itself at The Temple of Jones! Their defense sounds a lot like other spins from the past; Ken Lay of Enron and Dick Liddy of General American both confused a capital crisis with a Public Relations problem. They exemplify that for a financial service firm PR and Capital are one in the same!
OR EDJ could prevail and preach that EDJ was right and that these over zealous prosecutors have to be reigned in before they try to hunt down other innocent parties!
My main message to the EDJ and any RR is to have "Plan B" developed if you wake up one morning and find that your firm is under SIPC rescievership. So hope for the best and plan for worst
I am all ears of any of you can refute any this. I just enjoy shining the light on hypocrisy and providing another, albeit unpopular perspective.
Happy Holidays Everyone!
Love
Lance
CAN 'AH GETS AN AMEN FOR BROTHER LANCE?
AH MEN!!! EDJ DOES BELIEVE IN WRAP PROGRAMS, IT JUST BY PASSES THE IR.WHAT IS THIS PLAN CALLED THE 7-8 PREFERRED VENDORS .EDJ GPs RECEIVE AN ASSET BASED FEE EVERY YEAR THE FUNDS STAY AT THE FAMILIES AND ON TOP OF THAT 90% STAYS IN THE GPs pocket!!! HELLO. THEY ALSO RECEIVE PART OF THE UPFRONT LOAD. EDJ NETTED ABOUT 240 MILLION IN 2004 ONE HALF OF THAT CAME FROM REVENUE SHARING. ALSO THEY RECEIVE KICK BACKS FOR HAVING THE FUNDS HELD AT EDJ. THIS HAS TO BE ONE OF THE BIGGEST WRAP PROGRAMS AND ONLY 275 GPs benefit not the 8500 kool aid drinkers.HOW IS THIS IN THE CLIENTS BEST INTEREST?
CAN I GET AN AMEN FOR BROTHER FREE ?
AMEN…FOR BROTHER FREE…
Lance,
Synoptic and poignant, a masterpiece. Can't wait for the reprisal from the juicers.
[quote=FREE] AH MEN!!! EDJ DOES BELIEVE IN WRAP PROGRAMS, IT JUST BY PASSES THE IR.WHAT IS THIS PLAN CALLED THE 7-8 PREFERRED VENDORS .EDJ GPs RECEIVE AN ASSET BASED FEE EVERY YEAR THE FUNDS STAY AT THE FAMILIES AND ON TOP OF THAT 90% STAYS IN THE GPs pocket!!!! HELLO. THEY ALSO RECEIVE PART OF THE UPFRONT LOAD. EDJ NETTED ABOUT 240 MILLION IN 2004 ONE HALF OF THAT CAME FROM REVENUE SHARING. ALSO THEY RECEIVE KICK BACKS FOR HAVING THE FUNDS HELD AT EDJ. THIS HAS TO BE ONE OF THE BIGGEST WRAP PROGRAMS AND ONLY 275 GPs benefit not the 8500 kool aid drinkers.HOW IS THIS IN THE CLIENTS BEST INTEREST?[/quote]
Speak it Brother. Speak it.
Lance,
You say that the settlement with the US Attny general can be found. All that I can find is info on the SEC website. If this is a settlement with US Attny general then tell me where to find it. As far as I can tell by reading the SEC website it looks as if it deals only with the SEC. I am just trying to figure this thing out. I got suspecious when Doung Hill tried to stay on as MP. This is after I heard from numerous GPs that he was not very well liked and they were glad to see him go.
Here is the link to the Press Release from the DOJ (note: Not SEC)
http://www.usdoj.gov/usao/moe/press%20releases/archived%20pr ess%20releases/2004%20press%20releases/december/edward_jones .html
FBI, Postal Inspector and Securities Regulators were all in on this!
If you call the phone number they will fax you a copy of the settlement Page 2 of the settlment is interesting.
Cheers
Lance
Lance,
Please post an up to date link as the above seems to be archieved somewhere.
CJ
Just go to the US Attorney Eastern District of MO. Click on Press Releases. The next page click on Dec 2004 and you will see it. Sorry the link does not work, did you try copy and pasting it into your browser?
Anyway PM me with your fax if you want me to send you a hard copy of the settlement. Or just call Catherine Hanaway office (she is the the current AG for Eastern MO) and they will fax you out a courtesy copy of the press release and the settlement.
Cheers
Lance
UNITED STATES ATTORNEY'S OFFICE
EASTERN DISTRICT OF MISSOURI
JAMES G. MARTIN
United States Attorney
NEWS RELEASE For further information: Call Public Affairs Officer Jan Diltz at (314) 539-7719 December 20, 2004
For Immediate Release
EDWARD JONES & CO. ENTERS A $75,000,000 AGREEMENT WITH THE UNITED STATES
St. Louis, Missouri: The United States Attorney’s Office has entered a Deferred Consideration Agreement with Edward Jones & Company, L.P. (Edward Jones), United States Attorney for the Eastern District of Missouri, James G. Martin; Inspector in Charge of the United States Postal Inspection Service, Bernard Ferguson; and Special Agent in Charge of the St. Louis Office of the Federal Bureau of Investigation, Thomas E. Bush announced today.
The agreement arises out of the investigation of Edward Jones and its receipt of revenue sharing payments from certain mutual funds it designated as Preferred Fund Families by the United States Attorney’s Office, the U.S. Postal Inspection Service and the FBI. The Deferred Consideration Agreement provides that the United States Attorney’s Office will delay consideration of any actions stemming from the investigation for a period of two years in consideration of Edward Jones:
paying $75,000,000 to the SEC to be used to make restitution to Edward Jones customers;offering Edward Jones customers an opportunity to switch mutual fund companies free of charge if they currently have funds in a Preferred Fund Family;
instituting a corporate governance program to insure greater protection from potential conflicts of interest;
allowing mutual funds not part of the Preferred Fund Families access to Edward Jones brokers;
restructuring its bonus methodology to minimize potential conflicts of interest;
participating in the Pretrial Diversion Program for 2 years; and
fully cooperating with investigating authorities.
In the Agreement, Edward Jones acknowledged that Edward Jones sometimes promoted to its brokers, known within Edward Jones as Investment Representatives (IRs), the existence of revenue sharing by Preferred Families, as well as permitted, and on occasion encouraged, IRs, on a case-by-case basis, to consider revenue sharing in making recommendations to their customers to purchase certain mutual funds.
Edward Jones also acknowledged that revenue sharing was one of several important factors in the selection of two Preferred Funds. With respect to the retention of funds as preferred, revenue sharing was again important among several considerations.
The United States Attorney’s Office has been working closely with Postal, the FBI and the Securities & Exchange Commission (SEC), the National Association of Securities Dealers and the New York Stock Exchange in the course of this investigation. The culmination of the agreement is the direct result of a cooperative effort of these entities and investigative agencies.
This is good Thanks CJ for putting this up!
The funny thing is the Jones IR's are taking advantage of their clients by telling them they can switch for FREE, then going ahead and switching other investments for a new commission.
The Highly Ethical Jones is condoning CHURNING and BURNING, just a different name, but it's all the same, and their customers haven't a clue..................
"Edward Jones also acknowledged that revenue sharing was one of several important factors in the selection of two Preferred Funds. With respect to the retention of funds as preferred, revenue sharing was again important among several considerations."
"In the Agreement, Edward Jones acknowledged that Edward Jones sometimes promoted....and on occasion encouraged, IRs, on a case-by-case basis, to consider revenue sharing in making recommendations to their customers to purchase certain mutual funds."
Do what's right for the client................... my a$$.
Where are the juicers, kool-aid drinkers, clones, proudlp's, a-share peddling profit centers......?
They should be packing their cr@p and going where they can get informed and really do what's in the best interests of their clients. Not just think they are because they believe what they are told by a bunch of greedy criminals.
BBD,
What do you think of your pref funds system in light of this?
BPD,
I noticed you never responded to this thread so I thought I would remind you.
Ex,
Revenue Sharing has been around for a long time. It is obviously being more fully disclosed now. To my knowledge EJ was the only firm sharing their revenue sharing with their advisors. This along with a three month period where they were allowing only preferred funds to count towards the diversification program is why they got into trouble. Several firms have revenue sharing disclosures on their public websites now. This is the the industry as we know it and will only become more and more so. We will be run, if we are not currently being run now, by lawyers. So be careful for what you wish for.
A couple of sites for you:
14 Brokerages pay $34 million in fines:
http://www.ajc.com/money/content/money/0605/09mutfunds.html
Royal Alliance Revenue Sharing Disclosure:
http://www.royalalliance.com/language/RAARSLong.pdf
/URL">
HD Vest Revenue Sharing Disclosure:
http://www.hdvest.com/investor-mutualfunds.html
LPL Revenue Sharing Disclosure:
http://www.lpl.com/html/disset.html
Wells Fargo Revenue Sharing Disclosure:
https://a248.e.akamai.net/7/248/1856/195919ec7640a8/www.well sfargo.com/pdf/online_brokerage/mf_disc.pdf
SunAmerica Securities Revenue Sharing Disclosure:
http://www.aigfinancialadvisors.com/public/disclosures/reven ue-sharing.htm
FSC Securities Revenue Sharing Disclosure:
http://www.fscorp.com/EPProgramDisclosure.pdf
Securities America Revenue Sharing Disclosure:
http://www.securitiesamerica.com/downloads/Premier%20Fund%20 Families%20Rev%2011.05.pdf
RBC Dain Raucher Revenue Sharing Disclosure:
http://www.rbcdain.com/DRP_1.0/Public_Site/Common_Pages/DRP_ 1.0VContentIndex/1,37981,1-5-12-9,00.html
There are MANY more, I think you get the idea.
And a question for you: If we were so into selling just the preferred funds because they were paying us revenue sharing, then why is American Funds our top selling Mutual Fund (Which is the one we receive the lowest amount of revenue sharing on.) and the second best selling fund family is/was Franklin, even though it wasn’t even on our preferred list? You know why? I’ll tell you why, we believed as EJ advisors that that is what was best for our clients. That’s why! Not because of the revenue sharing. Put that in your pipe and smoke it!!!
BPD
P.S. Try and come up with a firm that does NOT do revenue sharing. I bet you can’t.
candybar,
But how many of the above firms took out a full page ad complaining about how bad the other firms were and that they would never do anything that wasn't in the customers best interest.
If that wasn't bad enough how many of the above firms had their managing partner/ceo resign effective the end of 2005?????
CJ,
The ad never mentioned revenue sharing or the lack there of.
May I remind you. Revenue sharing was and is not illegal.
BPD
yeah yeah yeah whatever!
And your firm got to pay
$75 MILLION
I never said revenue sharing is illegal, but the NASD, SEC etc, would prefer that firms do inform the clients hence the finds that the other firms you mentioned.....
hey candy bar how come none of the other firms had to pay as much as your firm.
oh and why is Doug Hill stepping down in 8 days??????
CJ,
MANY great firms both in our industry and outside our industry have paid substancial fines over the years. It is the reality of the litigious society that we live in today. No one, not even Edward Jones is perfect. It shows how strong a firm is when they can get past these challenges though. In spite of the challenges EJ has faced over the past year we have many good things that have happened. Please don’t make me post all the links to Sart Money, JD Power, Reg Rep, etc.,etc., etc. In terms of revenue at the firm it was our best year ever. We passed AG Edwards like they were standing still. Others are looking over their shoulders as we speak. We’re com’n whether you like it or not.
BPD
PigPayDay, please don't mention any Registered Rep articles. I think they are just shilling for Jones and AGE. These two firms have to be the most hated and most crooked firms on this forum. Just read the posts. I think the editors of this mag must have their head up their ass. I mean you Kevin Burke and Kristen French. Read the posts, see the fraud and you put these two POS firms at Number 1?
[quote=BigPayDay]CJ,
MANY great firms both in our industry and outside our industry have paid substancial fines over the years. It is the reality of the litigious society that we live in today. No one, not even Edward Jones is perfect. It shows how strong a firm is when they can get past these challenges though. In spite of the challenges EJ has faced over the past year we have many good things that have happened. Please don't make me post all the links to Sart Money, JD Power, Reg Rep, etc.,etc., etc. In terms of revenue at the firm it was our best year ever. We passed AG Edwards like they were standing still. Others are looking over their shoulders as we speak. We're com'n whether you like it or not.
BPD[/quote]
"substantial"
Litigous society refers to the tendency that folks have to SUE each other these days. You folks were FINED by the GOVERNMENT because you broke the law. I believe you will be learning more about the litigation part in California, from what I am reading...
OK, so your revenues were higher than A.G. Edwards. Apparently, from their report this week, fees are a MUCH higher percentage of their revenues year over year. So their growth should be considerably more consistent. We'll see how y'all do compared to AGE next time the market hiccups a bit.
[quote=BigPayDay]Ex,
Revenue Sharing has been around for a long time. It is obviously being more fully disclosed now. To my knowledge EJ was the only firm sharing their revenue sharing with their advisors. This along with a three month period where they were allowing only preferred funds to count towards the diversification program is why they got into trouble. Several firms have revenue sharing disclosures on their public websites now. This is the the industry as we know it and will only become more and more so. We will be run, if we are not currently being run now, by lawyers. So be careful for what you wish for.
A couple of sites for you:
14 Brokerages pay $34 million in fines:
http://www.ajc.com/money/content/money/0605/09mutfunds.html
Royal Alliance Revenue Sharing Disclosure:
http://www.royalalliance.com/language/RAARSLong.pdf
/URL">
HD Vest Revenue Sharing Disclosure:
http://www.hdvest.com/investor-mutualfunds.html
LPL Revenue Sharing Disclosure:
http://www.lpl.com/html/disset.html
Wells Fargo Revenue Sharing Disclosure:
https://a248.e.akamai.net/7/248/1856/195919ec7640a8/www.well sfargo.com/pdf/online_brokerage/mf_disc.pdf
SunAmerica Securities Revenue Sharing Disclosure:
http://www.aigfinancialadvisors.com/public/disclosures/reven ue-sharing.htm
FSC Securities Revenue Sharing Disclosure:
http://www.fscorp.com/EPProgramDisclosure.pdf
Securities America Revenue Sharing Disclosure:
http://www.securitiesamerica.com/downloads/Premier%20Fund%20 Families%20Rev%2011.05.pdf
RBC Dain Raucher Revenue Sharing Disclosure:
http://www.rbcdain.com/DRP_1.0/Public_Site/Common_Pages/DRP_ 1.0VContentIndex/1,37981,1-5-12-9,00.html
There are MANY more, I think you get the idea.
And a question for you: If we were so into selling just the preferred funds because they were paying us revenue sharing, then why is American Funds our top selling Mutual Fund (Which is the one we receive the lowest amount of revenue sharing on.) and the second best selling fund family is/was Franklin, even though it wasn't even on our preferred list? You know why? I'll tell you why, we believed as EJ advisors that that is what was best for our clients. That's why! Not because of the revenue sharing. Put that in your pipe and smoke it!!!
BPD
P.S. Try and come up with a firm that does NOT do revenue sharing. I bet you can't.
[/quote]
Exdrone,
BigPayDay had a good challange for you. Have you come up with a firm that does NOT do revenue sharing yet? How about your firm?
Didn't think so.
Oracle
ExDrone,
Still looking?
BPD
Oracle and BPD,
Do you know of any other firm that compensated their advisors for steering clients into certain fund families? Do you know of any other firm that provided bonuses and trips to its sales force because of the assets they placed into specific fund families?
These are specific differences between jones' rev. sharing and most other firms. Jones just happened to be the biggest abuser of it while doing what's best for its clients (sales force) and making sense of investing. Hold on a second..... I just threw up in my mouth a bit.
How did I miss this dialogue? I never claimed that other firms don't have rev sharing. HOWEVER, anyone with any perspective knows that Jones is in a class of its own when it comes to rev sharing. Having only 8 pref fund families, that are exclusively promoted within Jones creates more conflict of interest than anywhere else. The fact that Jones shares the rev sharing with the rep makes it even worse. This just encourages the brokers to sell those funds because they are paid more! This is made more repulsive by the pious attitude of most Jones brokers, that they are the only "ethical" firm.
The almost exclusive sale of A shares at Jones makes IR's more likely to sell sub performing funds in an attempt to reach coveted breakpoints. This makes fund companies all the more willing to pay to play at Jones....they don't have to have a full line of quality product across asset classes. The Jones IR's will sell funds "down and across" regardless of how the funds stack up in each category, because after all A shares and break points are what is ultimately best for the client.
All in all.......great for clients of course.
Ex
Three words: “Merrill Lynch Funds”
[quote=proudlp]Ex
Three words: "Merrill Lynch Funds"
[/quote]
Exactly,
At least Merrill is up front about their connection to those funds. Why doesn't Jones just come up with their own funds subadvised by their pref fund families. Then you could sell all the A shares you want, clients would get breakpoints and multiple managers, and it would be clear that Jones is making more money from those funds. You could also switch managers without charging another load.
Or you could do what Jones does now. They feign objectivity while receiving huge kickbacks for recommending only a few annointed fund families. What is better for "Mr Client?"
The continued Ed Jones/AG Edwards, my firm can beat your firm up banter is unmeasurably pathetic. So here is my response to it all.
My D*ck is bigger than your D*ck, my mama can beat up your papa and my sh*t smells as sweet as a rose and is worthy of being served as a feast for royalty. Neener Neener Neener.
[quote=dude]
The continued Ed Jones/AG Edwards, my firm can beat your firm up banter is unmeasurably pathetic. So here is my response to it all.
My D*ck is bigger than your D*ck, my mama can beat up your papa and my sh*t smells as sweet as a rose and is worthy of being served as a feast for royalty. Neener Neener Neener.
[/quote]
LOL dude you are now obsessed with the obsessions of others. It's a second-derivative obsession!
I’m waiting for someone to get obsessed with my obsessing. Maybe we can get MikeButler in on this one? (love ya’ mike)
[quote=dude]I'm waiting for someone to get obsessed with my obsessing. Maybe we can get MikeButler in on this one? (love ya' mike)[/quote]
excellent idea!
That would be a third-order obsession!
Is there a new group forming? That of the "Jones-hater" hater. What would make the Jones lover happier? After all, isn't the enemy of my enemy my friend?
If the hatred of Jones has enough behind it to create the new Jones-hater haters what does that say of the passion of the original haters? Who is worse, the passionate hater or their counterpart lover...or is it the hater hater or the lover hater. I gues a lover hater is really just another hater.
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