The Securities and Exchange Commission announced yesterday the distribution of a US$79 million fair fund to current and former customers of Edward D. Jones & Co., L.P.

The beneficiaries of the fund were victims of Edward Jones’ failure to adequately disclose revenue payments from a select group of mutual fund companies, the SEC said. Linda Chatman Thomsen, director of the Division of Enforcement, said, “This distribution marks a significant step in the commission’s program to return money to investors injured by improper mutual fund practices.”

On Dec. 22, 2004, the SEC brought settled administrative and cease-and-desist proceedings against Edward Jones for failing to adequately disclose its receipt of revenue sharing payments from certain mutual fund companies. Edward Jones consented to the entry of the SEC’s order without admitting or denying the SEC’s findings.

The order found that Edward Jones had entered into revenue sharing agreements with seven “Preferred” mutual fund families. The firm told the public and its customers that it was promoting the sale of the Preferred Families’ mutual funds because of the funds’ long-term investment objectives and performance. At the same time, however, Edward Jones failed to disclose that it received tens of millions of dollars of revenue sharing payments from the Preferred Families each year for selling their mutual funds.

The SEC’s order required Edward Jones to pay disgorgement and prejudgment interest of US$37.5 million and civil penalties of US$37.5 million into a Fair Fund for distribution to benefit customers of Edward Jones and to retain an independent consultant to, among other things, administer the Fair Fund.

With today’s final distributions, investors will receive all disgorgement, prejudgment interest, and civil penalties paid by Edward Jones, plus accumulated interest.