A.G. Edwards to pay $28 million to settle case

ST. LOUIS -- The brokerage firm A.G. Edwards will pay more than $28 million to settle a case with about 100 investors in Georgia, many of them retirees allegedly duped into risky investments by a former branch manager, the St. Louis Post-Dispatch reported Saturday.

The St. Louis-based company is negotiating a related but separate settlement with Georgia securities regulators, the newspaper said.

The investors, many in their mid-50s and mid-60s, say the former branch manager promised double-digit annual returns on blue-chip stocks, but invested their retirement savings in risky technology companies.

The agreement does not call for the firm to admit guilt. Still, A.G. Edwards could pay a $500,000 fine and have its broker-training and compliance programs reviewed for about two years, said Chris Riggall, a spokesman for Georgia Secretary of State Cathy Cox.

A.G. Edwards said established reserves should cover any unpaid settlements with the customers and the state.

The firm does not expect to take additional charges for the costs, spokeswoman Margaret Welch said Friday.

She said all the brokers involved are no longer with the firm.

"We believe these matters were isolated to one branch and a limited number of financial consultants and had no connection with any other office or accounts maintained by any other A.G. Edwards financial consultants," Welch said.

The plaintiffs are mostly former employees of a Procter & Gamble Co. detergent plant in Augusta, Ga. Some held $1 million or more in P&G stock, said Edward Dovin, an attorney representing the investors.

William F. Gibbs Sr., branch manager at the time, told the workers that their money would be invested using the Dow Dividend Strategy, which he said historically had returns of 20 percent a year, Dovin said.

Gibbs, who is retired, began deviating from the decades-old investment strategy, and much of the investors' money was placed in technology stocks, Dovin said. When those stocks plummeted, the investors lost their savings.

The settlement should cover most of the money they invested, but not their legal fees. It is the largest settlement with an investment firm in Georgia history, Riggall said.

------

On the Net:

A.G. Edwards: http://www.agedwards.com/