Several class actions have been filed against investment broker Edward D. Jones & Company, LP, and certain of its officers and directors by investors who purchased Lord Abbett Funds, American Funds, Federated Funds, Goldman Sachs Funds, Hartford Mutual Funds, Putnam Funds, or Van Kampen Funds through the company between January 25, 1999, and January 9, 2004. The actions claim that the defendants violated federal securities laws by failing to disclose that it was steering its clients to purchase the funds because it was receiving huge incentive payments from the funds. The investors seeks unspecified compensatory and punitive damages.

The action alleges that the defendants failed to disclose that Edward Jones received valuable incentive payments, valued at $100 million per year, in return for Edward Jones recommending those funds to its clients. More specifically, the defendants allegedly failed to disclose that: (1) Edward Jones brokers had entered into 'revenue sharing' agreements with the seven mutual fund companies named; (2) Edward Jones exclusively trained its brokerage staff to sell the seven funds; (3) Edward Jones discouraged its brokers from contacting and selling other mutual funds where no 'revenue sharing' agreement had been made; and (4) Edward Jones brokers and representatives received extra compensation when they sold any of the seven funds to class members.

On January 9, 2004, the scheme was revealed when The Wall Street Journal published an article about the revenue sharing agreements. The article stated that when training its brokers in fund sales, Edward Jones gave them information almost exclusively about the seven 'preferred' mutual funds, and that bonuses for brokers depend in part on selling the preferred those funds. The article also stated that Edward Jones generally discouraged contact between brokers and sales representatives from rival funds. The action alleges that while revenue sharing and related incentives are familiar to industry insiders, Edward Jones failed to tell customers about any of these arrangements.