Five years after it settled a lawsuit for $34 million that claimed the firm had widespread, intentional racial discrimination in the company’s policies and practices, Edward Jones was hit this week with another racial discrimination lawsuit by a half-dozen black financial advisors.
The lawsuit, which is seeking class action status and unspecified compensatory and punitive damages, is centered on advisors’ pay.
“This case concerns systemic race discrimination against Black employees in the financial services industry,” according to the lawsuit, which was filed Tuesday in U.S. District Court in the Eastern District of Missouri. “For many years, Edward Jones has knowingly paid its Black financial advisors less than similarly situated white peers.”
“These pay disparities are primarily attributable to two centralized policies: [first,] Edward Jones’ client transfer policy or CTP, which disproportionately provides white FAs – and not Black FAs – with client accounts - or 'assets' - that enable them to meet performance expectations and earn commissions and bonuses,” according to the complaint.
“And [second,] Edward Jones’ Salary Assignment Policy or 'SAP,' which sets starting salary based on the compensation [financial advisors] earned immediately prior to starting with Edward Jones – a practice that is well-understood to perpetuate market discrimination,” according to the complaint. “As a result of these policies, Edward Jones’ Black FAs receive less compensation, fewer promotions, and are terminated more frequently than their white peers.”
A private partnership, Edward Jones is a giant in the retail brokerage industry with more than 20,000 financial advisors. An Edward Jones spokesperson on Thursday did not return calls to comment on the lawsuit.
“Edward Jones’ CTP discriminates against Black FAs,” according to the complaint. “White FAs on average can receive tens of millions of dollars’ worth of client accounts upon starting as an FA, which generate substantial commission revenue and put them on the path to success.
“Upon information and belief, Black FAs on average receive far fewer assets – if any at all – and the quality of those assets is far more likely to be poorer,” according to the complaint. “These disparities compound over time.”
“Edward Jones knows that Black FAs are compensated less than their white peers, but has done little to correct this discrimination,” according to the complaint. “For many years, Edward Jones has tracked the compensation and demographic data of its FAs.”
Edward Jones has a history of claims against the firm alleging racial bias.
In 2021, the firm agreed to pay $34 million to settle a lawsuit brought by a former broker in 2018 that claimed widespread, intentional racial discrimination in the firm’s policies and practices.
The lawsuit, which was filed in 2018 in U.S. District Court in Illinois, alleged that Edward Jones “employs company-wide policies and practices regarding training, compensation, partnerships, and the assignment of territories, business opportunities and sales support that unlawfully segregate its workforce and den[ies] African Americans the income and advancement opportunities because of their race."
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