California Attorney General Bill Lockyer has filed suit on behalf of the state against brokerage firm Edward D. Jones, claiming improper marketing of mutual funds, Reuters reported.

The suit also takes issue with a $75 million settlement reached between Jones and the Securities and Exchange Commission, which he called "inadequate for a national settlement."

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Lockyer stated that Jones should have disclosed arrangements it had with seven “preferred” mutual fund groups who allegedly paid Jones for promoting and selling their shares, Reuters reported.

"The documents we have obtained show Jones blatantly disregarded investors' interests as it collected some $300 million in secret payments from mutual funds," Lockyer said.

He criticized a $75 million settlement between Jones and the Securities and Exchange Commission as "inadequate for a national settlement."

Based in St. Louis, MO, Jones has more than 9,000 offices in the United States, Canada and Britain. Reuters reported that the company could not be reached for comment and that the SEC declined to comment.

The California suit claims that seven mutual fund groups were involved in the "shelf space" agreements with Jones, including American Funds, Federated Investors Inc. (FII.N: Quote, Profile, Research), Goldman Sachs Group Inc. (GS.N: Quote, Profile, Research), the Hartford mutual funds, Lord Abbett & Co. LLC; Putnam Funds, a unit of Marsh & McLennan Cos. (MMC.N: Quote, Profile, Research); and Van Kampen Investments, Reuters reported.

The sale of these funds comprised about 98 percent of all Jones' mutual fund sales from January 2000 through the present, according to the state's complaint.