California sues brokerage firm for fraud on same day SEC announces settlem

California sues brokerage firm for fraud on same day SEC announces settlement over similar allegations
Monday December 20, 2004

By GILLIAN FLACCUS
Associated Press Writer

LOS ANGELES (AP) California filed a lawsuit Monday accusing the brokerage house Edward D. Jones & Co. of accepting $300 million in improper payments to push its clients toward certain mutual funds.

The announcement came the same day the company reached an agreement with the Securities and Exchange Commission to pay $75 million to settle allegations over Edward Jones' mutual fund sales practices.

California Attorney General Bill Lockyer, who brought the state's lawsuit, said clients who were deceived deserved a bigger payout.

The lawsuit claims Edward Jones instituted a policy in 2000 in which brokers would receive commissions, contest points and special vacations as incentives for selling a certain seven funds. The mutual fund companies, in return, paid the firm for preferential treatment.
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