State regulators target Edward Jones for $3m fine over 'No Call Registry' violationsBy DAVE SOLOMON
New Hampshire Union Leader
April 12. 2013 11:07AM
CONCORD — Securities regulators are seeking a $3 million fine from Edward Jones investment advisors, after a two-year investigation into the financial services firm revealed what state officials called widespread violations of the national Do Not Call Registry.
Investigators in the Bureau of Securities Regulation claim that from January 2011 to March 2012, the company, with 58 branch offices in New Hampshire, made approximately 20,000 calls to numbers on the registry. Each call is subject to a $2,500 maximum fine.
In addition to the fine, bureau attorneys are calling on the director to suspend the company's broker license for a period yet to be determined; pay investigative costs; and enter into a compliance program with mandatory reporting back to the bureau.
An Edward Jones spokeswoman said the company would contest the charges in an administrative hearing.
The 24-page petition for relief filed on Thursday alleges that Edward Jones encouraged violations of the registry by advising agents to make door-to-door cold calls on prospective investors, and then classify those contacts as "established personal relationships" that would allow calls to numbers on the do-not-call list.
"Edward Jones has attempted to use the personal relationship exception to justify the vast majority of its questionable telemarketing practices," according to the petition, which also claims that, "EJ's supervisory procedures as they pertain to telemarketing appear to be not only insufficient but almost nonexistent."
The company operates more than 11,000 locations in the United States and Canada, and focuses on individual investors and small-business owners.
"Edward Jones regrets that the New Hampshire Bureau of Securities Regulation has chosen to file this action against the firm," said spokeswoman Regina DeLuca-Imral from company headquarters in St. Louis.
"Edward Jones has received no complaints and understands only a single complaint was made to New Hampshire regulators. According to the complaint, this person had a pre-existing business relationship with Edward Jones. But assuming that complaint is valid, we regret any inconvenience that telephone contact might have caused. Edward Jones believes it has meritorious defenses and we intend to vigorously defend our position."
The investigation was triggered by a complaint to the bureau from an 80-year-old Somersworth woman who said she received an unsolicited call on Nov. 7, 2011, from an Edward Jones financial advisor. Each advisor maintains a separate office, explaining the total of 58 in the state.
During the call, the advisor allegedly attempted to sell the woman a tax-free municipal bond issued by the Port Authority of New York and New Jersey, promising her a 4.5 percent annual return on her investment, through 2031.
130,000 calls made
In March 2012, the bureau began requesting information from Edward Jones, and received a list of 130,000 calls made to New Hampshire phone numbers since January 2011, originating both from Edward Jones national headquarters in St. Louis, Mo., and from the company's New Hampshire branch offices.
"We counted close to 300 complaints against the firm since 2010 from across the country," said Jeff Spill, deputy director of the bureau. "It obviously was a red flag for us that there was a problem here, and that's why we dug further."