Edward Jones Postpones Partnership Sale

The turmoil in the mutual fund industry has led Edward Jones, one of the nation's largest retail brokerages, to postpone the sale of $150 million in limited partnership interests, a company spokesman said.

The St. Louis-based brokerage delayed the offering because of concern that changes in the regulatory landscape for the $7 trillion mutual fund industry could have a negative impact on the firm's profitability.

The sale of mutual funds is big business for Edward Jones, accounting for roughly half the firm's $2.2 billion in annual revenue. The privately held firm has 5.3 million mutual fund customers.

"In fairness to all, we postponed the closing until the impact of the reform package is known," said John Boul, an Edward Jones spokesman. "We don't know what impact it will have on our business."

The sale of limited partnership interests is the main way Edward Jones, one of the nation's last big private brokerages, rewards its top employees. Limited partners at Edward Jones get to share in the firm's profits.

The firm, which employs more than 28,000 people, currently has 5,000 limited partners and had intended to add at least another 1,000 through the planned sale. The delay in the offering also means Edward Jones will have to wait until sometime next year to raise an additional $150 million in capital from its employees.

Boul said he's not aware of any regulatory investigation of Edward Jones' mutual fund sales practices. To date, there have been no allegations that Edward Jones brokers engaged in any improper trading in shares of mutual funds, something that has plagued brokers at a number of other Wall Street firms.

Boul declined to comment on what regulatory changes in the mutual fund industry concern executives at Edward Jones.

But people familiar with the firm said Edward Jones executives may be worried about a regulatory crackdown on revenue-sharing agreements between brokerages and mutual fund companies. Regulatory filings reveal that such payments generate tens of millions of dollars for Edward Jones each quarter.