First comes the SEC settlement, then the class action lawsuit. That is the pattern feared by legal counsel to the firms in regulators' cross hairs, and in the case of Edward Jones that fear has been realized.

Last week Burg Simpson Eldredge Hersh & Jardine, a Dallas-based law firm slapped a class action suit on Kansas City-based Edward Jones. The suit claims that the brokerage firm failed to fully inform investors that some funds it recommended had paid it for shelf space.

"Edward Jones failed to disclose to its clients that these seven fund families provided the firm tens of millions of dollars in fees and incentives in return for this preferential selling arrangement," according to the claim.

The law firm claims to have been contacted by 50 to 60 Edward Jones customers and expects to find many more.

Edward Jones settled allegations brought by the SEC and the NASD last year and agreed to pay $75 million in civil penalties. Much of those funds will be used to pay restitution to harmed account holders. Any judgment against Edward Jones would take the settlement into account.

However, lawyers at Burg Simpson say that those funds will only cover 2 cents of every dollar lost by accountholders.  

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