A.G. Edwards & Sons took millions of dollars in secret kickbacks to promote some mutual funds, a class-action lawsuit filed on behalf of investors alleges.
The lawsuit, filed yesterday in St. Louis County Circuit Court, claims that the payments created a conflict of interest between the investment firm and its customers, the Associated Press reported.
The Securities and Exchange Commission requires that revenue sharing agreements, which are legal, be disclosed to investors. The lawsuit said that the payments, which were undisclosed to investors, took place over a five-year period. It also said that some of the names on A.G. Edwards' preferred list were Hartford Funds, American Funds, Oppenheimer Funds, Evergreen Investments and Dreyfus Funds.
St. Louis-based A.G. Edwards has denied having such a list. A spokesman for the firm declined comment Tuesday, telling the Associated Press that it had not yet seen the lawsuit. The company reported $261 million in commissions from mutual fund sales, or about 10% of its overall revenue, for the fiscal year that ended Feb. 29, 2004.