How big of an impact will the A.G. Edwards sale to Wachovia have on mutual fund distribution? In the initial hours after the two broker-dealers announced the deal Thursday morning that was still an open question. Despite its heft -- AG Edwards has more than 7,000 reps -- the St. Louis brokerage has had a limited impact on the fund landscape as it has mostly limited the funds it distributes to a small number of special partners.

Until recently, the broker-dealer also studiously avoided offering proprietary asset management products to investors. That changed at the end of 2005 when it formed Gallatin Asset Management to provide subadvisory services to third party institutions.

Recently, mutual funds have brought the firm has been under increased regulatory scrutiny.

Market-timing reps got A.G. Edwards in hot water in January 2004 with regulators started investigations into its practices as part of the Spitzer-Galvin led mutual fund market-timing investigations. Eventually, the SEC eventually alleged that some of its reps improperly made market-timing trades in some 200 mutual funds from 50 mutual fund sponsors. A.G. Edwards settled those latter charges earlier this month and paid $3.86 million in fines.

The brokerage has also caused a stir with its revenue sharing practices.

In 2005 investors brough a law suit claiming that A.G. Edwards had taken payments from fund firms included on a "preferred list." Funds buying shelf space, acccording to the suit, included The Hartford, American Funds, Oppenheimer Funds, Evergreen Investments and Dreyfus Funds. However, executives at the brokerage firm denied that it maintained a preferred list of funds.

In January of 2006 the NASD said that it would take action against A.G. Edwards for accepting additional payments for funds given special placement in its IRA product line.

Still, the firm retains a strong presence in Middle America and could become a broader force in fund distribution as regulators push the brokerage industry to open-up their platforms and shed light on how funds pay their distributors. In that environment. 

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