A California judge tossed out a shelf-space fraud case brought against St. Louis-based
Superior Court Judge Loren McMaster said that securities-industry disclosure rules are a federal, not a state, issue.
This is the second time a judge has dismissed a mutual fund industry-related case brought by California State Attorney General Bill Lockyear. Last year, Lockyear sued Los Angeles-based
Lockyear is appealing that case, and Tom Dresslar, a spokesman for the Attorney General, said he would also appeal last week's Edward Jones decision.
Filed in 2004, Lockyear's case claims that Edward Jones did not tell clients about sales agreements and incentives offered to distributors. In Dec.ember 2004, the brokerage house agreed to pay $75 million and significantly increase disclosures in its documents to stop a
Richard Phillips, an attorney with
Although they cannot enact their own disclosure requirements, federal law does allow states to file fraud cases against mutual fund companies, Dresslar noted.
"We want compensation--damages and restitution," said Lockyear. No dollar amount has been named for damages in either case.
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