Edward Jones has been hit with a second excessive fee and self-dealing suit regarding its 401(k) plan. This is the second suit of this nature this year against the brokerage firm and just one of many that have been filed against other defendants this year. The suit alleges that the firm and a number of employees overseeing the retirement plan breached their fiduciary duties by selecting high-cost mutual funds when identical, lower-cost ones were available, choosing “an unreasonable number” of high-risk investment options, and including a “poorly performing” money market fund in place of a stable value fund.

The excessive fee suit also claims Edward Jones entered into arrangements with such “product partners” whereby fund companies paid for access to the “captive market” of 401(k) participants by giving revenue-sharing fees to Edward Jones in return for “shelf space” on the retail side of the brokerage business. These revenue-sharing agreements, as the suit states, were “contingent upon” Edward Jones offering the partners’ investment options in the roughly $4 billion Edward D. Jones & Co. Profit Sharing and 401(k) Plan.

“Edward Jones was able to negotiate and secure these acknowledged Revenue Sharing Agreements with its Product Partners in part by guaranteeing them access to the billions of assets under managements in the Plan, where Edward Jones, through its designees, could choose all of the investment options,” the complaint states. These arrangements altered the fiduciaries’ decision-making and wound up costing participants millions of dollars in excessive fees, according to the suit.

 

 

 

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