Edward Jones moved fast to pay restitution and penalties to settle a one-time Montana rep's apparent theft from client accounts, but it remains to be seen whether the squeaky-clean firm will have to change its recruiting practices.
Anne Marie Schlenker is now facing FBI charges and up to 20 years in prison for allegedly transferring nearly $350,000 from Edward Jones' Bozeman client accounts to pay her own bills.
The transfers reportedly started in 2006, about two years after Schlenker came aboard Edward Jones, and continued into late 2009.
Edward Jones got her confession last February, terminated her, and started negotiating a settlement with the aggrieved clients shortly thereafter.
While this might otherwise be yet another "cautionary tale" of yet another rogue advisor damaging the national brand and the professional reputation of thousands of colleagues, the fact that it's Edward Jones raises additional questions.
For one thing, it's sad that the firm didn't catch on to the bad transactions faster. Three years is a long time for a relatively new affiliate to go without someone auditing his or her activities just to make sure everything's OK. Maybe this particular situation was unusually devious, but it's up to management to dig deeper.
For another, Schlenker evidently passed the firm's character checks years ago. But with Edward Jones expanding very aggressively -- given its churn, it might need to hire 2,400 new advisors this year to meet recruiting targets -- there hasn't been much talk about how it plans to make sure these people make the ethical grade.
A clean regulatory record is nice but, as this case demonstrates, only goes so far.
Edward Jones' high production minimums complicate the situation further. Sure, it may be relatively easy to hit $240,000 in revenue in a big city, but reps in smaller markets like Bozeman may feel a lot more pressure to cash in on easy money -- and leave the firm to pick up the pieces.