Edward Jones, Osaic, Cambridge to Pay $8.2 Million Over Mutual Fund Fee Rebates

In a significant development, FINRA has ordered three prominent brokerage firms—Edward Jones, Osaic Wealth, and Cambridge Investment Research—to pay over $8.2 million in restitution to customers who were harmed by the firms' failures to provide available mutual fund sales charge waivers and fee rebates. This action underscores the importance of proper supervision and compliance within the financial industry.

The firms' lack of supervisory systems led to customers not receiving fee waivers and rebates, resulting in excess charges totaling over $8.2 million. Edward Jones customers paid $4,440,979, Osaic Wealth customers paid $3,096,490, and Cambridge Investment Research customers paid $699,217 in excess sales charges and fees. Each firm agreed to repay affected customers, including interest, as part of the settlement with FINRA.



The firms' failures to provide fee waivers and rebates had a direct impact on customers' investment returns and overall financial well-being. By not receiving the rights of reinstatement benefits to which they were entitled, customers were effectively overcharged for their mutual fund purchases. This highlights the importance of firms maintaining adequate supervisory systems to ensure customers receive all available benefits.

FINRA's investigation and subsequent orders have influenced the firms' internal processes and compliance measures. Each firm demonstrated extraordinary cooperation by proactively addressing the issue. They initiated an extensive review of their systems, practices, and procedures, engaged an outside consultant to identify disadvantaged customers and calculate restitution, and established a plan to efficiently identify, notify, and repay customers eligible for restitution. This proactive approach shows a commitment to preventing similar failures in the future and ensuring compliance with relevant regulations.



The firms' lack of supervisory systems allowed customers to be overcharged for mutual fund purchases, violating FINRA Rule 2111. This rule requires firms to have a supervisory system in place to ensure that their registered representatives comply with applicable securities laws and regulations. By failing to establish and maintain such a system, the firms put their customers at a disadvantage and exposed themselves to regulatory scrutiny.

In conclusion, the actions taken by FINRA serve as a reminder to brokerage firms of the importance of maintaining adequate supervisory systems to protect customers' interests. The firms' proactive response to the investigation demonstrates a commitment to addressing the issue and preventing similar failures in the future. As the financial industry continues to evolve, it is crucial for firms to stay vigilant and ensure compliance with relevant regulations to protect both customers and the integrity of the market.