Top DNC Violations #6

Edward Jones is a national financial broker that has its headquarters in Des Peres, Missouri. It is an extensive firm that offers financial services in the US and Canada, and it has over 7 million clients. While it has offices in over 12,000 locations, its problems arose in New Hampshire, where is has 58 offices. Edward Jones specializes and focuses on small-business owners and individual financiers. Part of the company’s marketing strategy is door-to-door visits to try and find new customers, as well as cold calling and promotional text messages.

Edward Jones was under investigation by the New Hampshire Bureau of Securities Regulation (BSR) after there was a number of complaints made by residents on the Do-Not-Call list, who claimed that the company had been calling them without permission. During the investigation the BSR uncovered a record of around 20,000 phone calls that where made to residents who were on the National Do-Not-Call registry.

The company was found guilty of soliciting potential clients through the use of cold calling, and a huge number of these cold calls were made to numbers that were registered with the DNC database.

The Fine

Edwards Jones was facing a $3,000,000 lawsuit, but in February this year they agreed to pay $750,000 dollars while also making some changes in the firm. They were charged with violating the rules and regulations of the Do-Not-Call act by cold calling a large percentage of residents that were registered in the DNC list. It was also charged for the lack of training and support offered to its employees with regards to the proper rules and regulations that surround the DNC, and the company’s lack of training for its staff with regards to how to successfully navigate and enter details onto the DNC database to try and avoid calling people who were registered there.

As well as paying the fine Edward Jones had to agree to stop its illegal cold calling, and to alter and reshape their telephonic solicitation practices. The company is also responsible for training its staff in the correct and professional way to use telephonic marketing, and the most efficient ways in which to correctly use the Do-Not-Call Database to ensure that there are no future violations.

Other Repercussions

This is not the first charge that the company has been hit with, as in 2004 SEC, NASD and the New York exchange bought charges against Edward Jones for failing to disclose revenue sharing payments and the firm had to fork out $75 million and had to agree to disclose its financial practices on its website. The statement that they made was: “Edward Jones receives payments known as revenue sharing from certain mutual fund companies, 529 plan program managers and insurance companies (collectively referred to as “product partners”). Virtually all of Edward Jones’ transactions relating to mutual funds, 529 plans and insurance products involve product partners that pay revenue sharing to Edward Jones. We want you to understand that Edward Jones’ receipt of revenue sharing payments creates a potential conflict of interest in the form of an additional financial incentive and financial benefit to the firm, its financial advisors and equity owners in connection with the sale of products from these product partners.

Despite these charges the company hasn’t taken much of a knock and in fact continues to grow, the charge may have tarnished the company’s reputation for a limited amount of time, but the company is well known for its high standards and is one of the most popular investment brokers in the US. If they stick to the rules and don’t violate any more of the DNC’s laws, then the company should be able to recover significantly and go on with business as usual.