A.G. Edwards, Inc. (NYSE: AGE) is an intermediate size full-service securities broker-dealer that operates throughout the United States providing securities and commodities brokerage, investment banking, trust services, asset management, financial and retirement planning, private client services, investment management, and other related financial services to individual, governmental, and institutional clients.
The A.G. Edwards is a member of the New York and other major stock and commodities exchanges. The firm’s global headquarters are located in St. Louis, Missouri. As of 2006, the firm had 738 offices in 50 states, the District of Columbia, and also has offices in London, and Geneva. The company serves its clients through its branch-office networks staffed with approximately 7,000 financial consultants.
The Company was founded in 1887 by General Albert Gallatin Edwards in St. Louis. It was among the first brokerage firms to go public in the 1970s. The A.G. Edwards has since grown from its regional roots into one of the more recognizable brands in financial services.
Our law firm represents institutional and individual investors nationwide with significant losses in their portfolios, retirement plans or investment accounts. Our attorneys and staff have more than 100 years of combined experience in the securities industry and in securities law. Several of our lawyers served for years as Vice President or Compliance Officer of brokerage firms.
Each lawyer and staff member of our firm is devoted to assisting investors to recover losses caused by unsuitability, over-concentration, fraud, misrepresentation, self-dealing, unauthorized trades or other wrongful acts, whether intentional or negligent. We have handled over a thousand cases against hundreds of large and small investment firms, including claims against both A.G. Edwards.
Call us at (800) 259-9010 or contact us through our website to arrange a free confidential consultation with an attorney to discuss your experiences with an investment advisor or financial firm which resulted in losses.
The National Association of Securities Dealers may take disciplinary action against A.G. Edwards Inc. over the sales of class B and C shares of mutual funds, the company said in a regulatory filing Monday morning.
The matter involves supervisory procedures and possible suitability violations, the company said.
Mutual funds often have more than one share class, and B and C classes can have higher expense ratios than the A class.
The St. Louis-based broker said the NASD has orally proposed a settlement, including a fine, the offer to switch customers to class A shares, and reimbursement for underperformance and the retention of an independent consultant to review supervisory procedures. Edwards said it is currently reviewing the allegations.
Separately, the NASD has advised the firm it has recommended disciplinary action concerning the sale of funds to individual retirement accounts (IRA) for which certain fund companies made additional payments to Edwards for sales. Regulators have been cracking down on potential conflicts of interest between fund companies and brokers who sell shares in recent years.
Edwards is the focus of previously-disclosed and ongoing investigations by state and federal regulators over compensation from fund families in exchange for pushing certain funds. The company is also being probed over alleged market-timing and late-trading infractions, which can harm long-term shareholders.
Edwards said the impact of the investigations will not be material to the consolidated financial condition of the company, but could affect operating results in one or more periods.
A.G. Edwards Inc. said its profit jumped 52 percent in the latest quarter as clients of the brokerage firm poured more money into fee-based accounts.
The St. Louis-based company, which has 746 offices and more than 6,600 stockbrokers, said net income rose to $78.3 million in the fiscal 2007 third quarter. That’s up from $51.7 million in the prior third quarter
A.G. Edwards’ net revenue increased 14 percent to $767.5 million from $674.1 million a year earlier, while non-interest expenses rose 7.6 percent to $643 million. Wall Street had expected revenue of about $742 million.
A.G. Edwards booked its highest revenue from asset management and service fees, which rose 18 percent to $318.2 million. Commission revenue inched up less than 1 percent to $247.6 million.
Fees are up 20 percent for the first nine months of the fiscal year, reflecting a migration of client assets into fund-advisory plans and other fee-based services, A.G. Edwards said.
At the end of November, 11.4 percent of the company’s $370 billion of client assets were in fee-based accounts. Brokerage firms have been encouraging fee-based plans, which generate predictable revenue regardless of ups and downs in the market, over traditional commission-based accounts.
Massachusetts securities regulators said employees in the Boston office of A.G. Edwards Inc. made billions of dollars of improper trades in mutual funds for two hedge funds with the approval of superiors at the St. Louis brokerage firm.
Massachusetts and other regulators have brought numerous market-timing trading cases against investment firms and individuals, but this case is unusual since A.G. Edwards had the hedge funds sign a letter indemnifying the brokerage firm against legal actions that might arise from the client’s frequent trading.
“It’s pretty obvious” A.G. Edwards officials “knew what they were allowing when they fretted about indemnity agreements,” said Massachusetts Secretary of State William F. Galvin. Company officials, he said, “were more interested in protecting themselves than in protecting their investors.”
A.G. Edwards also had a policy of exempting clients from its own market-timing prohibitions provided they meet certain requirements, which included the client signing a “hold harmless letter.” Massachusetts officials said such an exemption is no defense for Edwards, because the rapid trading the company allowed increased expenses at the dozens of mutual funds targeted by the hedge funds, an expense borne by the funds’ long-term shareholders, including other A.G. Edwards customers.
The complaint charged A.G. Edwards with fraud for allowing select investors to pursue trading policies that most mutual funds prohibited. A.G. Edwards did not respond to the accusation but spokeswoman Margaret Welch said the firm would “defend ourselves vigorously.”
An Oceanside, California woman sued national brokerage firm A.G. Edwards alleging that the company earned secret commissions when it sold her nearly $500,000 of a type of security known as a variable annuity.
Kathleen Mitton is described in the suit as a retiree and an elderly investor who became the latest person in the San Diego area to file a complaint in federal court over the sale of the investment products, which combine a form of life insurance with mutual fund shares.
According to Ms. Mitton, the company sold investments she held and reinvested the money in the variable annuities, which left her in the position of having to pay large penalties for early termination of the annuity contracts to gain access to the money.
A.G. Edwards “never informed her that the annuity products offered were limited to products offered by the participating insurance companies and that it had entered into … undisclosed fee sharing agreements providing undisclosed compensation to (Edwards) for the sale of certain annuity products,” the suit says.
“When I came to North America from Scotland,” Mitton said, “I had to borrow my fare from the Canadian government. After a few years in Canada, I came to the United States with $2,000 in my pocket.”
She said she accumulated the money in her IRA slowly by repeatedly buying homes that she renovated and sold, and by putting every cent she could into her retirement fund during the 14 years she worked at the San Onofre Nuclear Generating Station.
As a retired investor with an adult son and no other potential heirs, Mitton said she had no need for the nearly half-million dollars of life insurance that was a component of the annuity. Moreover, she said, some of the mutual funds in which she had invested were sold to pay for an annuity that in turn invested in those same mutual funds. She was forced to refinance her Oceanside home twice to avoid paying up to 20 percent in early termination fees to withdraw money from her Individual Retirement Account, she said.
Wachovia Corporation agreed to acquire A.G. Edwards Corporation for $6.8 billion in stock. This will vault Wachovia into the second-largest U.S. retail brokerage, with $1.1 trillion in client assets, behind only Merrill Lynch.
This transaction is the largest of recent takeovers of regional brokerage firms, which are having difficulty fending off efforts to hire their representatives. Meanwhile, falling commissions in the industry has caused disruptions in sales staffs.
For years there has been speculation over whether A.G. Edwards, a mostly employee owned firm, could maintain its independence and raises new speculation about other large regional brokerages such as Jeffreys & Company and Raymond James.
The deal will cause Wachovia to surpass Citigroup’s Smith Barney brokerage unit in number of representatives as well as Ameriprise Financial, which claimed to be third. Wachovia said the combined company will have 15,000 financial advisers and an increased presence in 48 of the 50 largest metropolitan areas.
Wachovia has built its brokerage business relatively quickly, largely through the acquisition of Prudential Securities in 2003, and several smaller firms. Prudential Financial, Inc. continues to own 38% of Wachovia.
By purchasing A. G. Edwards Wachovia will not only have a larger base to market financial products but will nearly double its number of brokerage offices to 1,512. The acquisition of A. G. Edwards will also increase Wachovia’s focus on small investors and give it wider geographic coverage, particularly in the Midwest.
A question yet unanswered is whether, with disparities in comission pay, Wachovia can retain the A. G. Edwards Brokers as well as its own. Merrill Lynch retained a much smaller number of brokers than expected it bought Advest in December 2005. UBSAG saw an exodus of brokers from Piper Jaffray’s advisory business, which the Swiss bank bought last year.
Wachovia and its rivals are eager to take aim at baby boomers, tens of millions of whom could take control of their retirement assets in the next decade. Wachovia also advertises its services to women and young people.