Edward Jones Fined For Inadequate Record Handling
The firm failed to maintain and enforce proper written procedures over consolidated reports, including about its clients’ outside assets, from April 2010 through 2014, according to Finra.
Edward Jones lacked a system to reduce the risk of inaccurate information in the reports and had no way of ensuring the reports were provided to clients and not just printed by its reps, the regulator says. During the period in question Edward Jones generated around 52 million consolidated reports via two platforms, according to Finra. The firm’s reps could populate the reports automatically on assets held with Edward Jones but had to manually input assets held away from the firm, the regulator says. But “due to an unintentional vendor created design flaw,” one of the tools — neither of which Finra identifies — permitted Edward Jones reps to also edit the assets held at the firm, according to Finra.
Edward Jones also lacked procedures and guidance about how its reps should input outside assets and what they needed to do to verify and update them, the regulator says. Finra also says that none of the 65,000 reports it analyzed revealed any material inaccuracies or misleading statements.
In its letter of acceptance, waiver and consent, Finra reminds member firms that they must ensure they have the ability to supervise consolidated reporting through “a rigorous system of internal controls.” According to a prior notice following concerns over inadequate supervision, firms that can’t properly do so must prohibit their reps from distributing consolidated reports as well as ensure they abide by the prohibition, Finra says.