Although the Securities and Exchange Commission sued Edward Jones for $75 million in 2004 for not disclosing revenue-sharing agreements with a select group of mutual funds, the brokerage has continued the practice, and quite profitably. Last year, Edward Jones reaped $172.3 million in revenue-sharing fees from its "preferred" list of mutual funds, more than double previous years, the St. Louis Post-Dispatch reports.
Of course, the firm now discloses the practice, whereby it is completely legal. In fact, the brokerage tells customers on its website that virtually all of the funds on its preferred list pay it to be on that list. "The firm does not receive any significant amount of revenue-sharing payments from any nonpreferred mutual fund families," the website says.