“Federal regulators took two big steps in the expanding investigation of the mutual-fund industry, securing a $50 million fine against a major fund company regarding payments to brokerage firms that favored its products, and moving toward taking action against a brokerage house that accepted such payments,” writes John Hechinger in today’s Wall Street Journal.

“Massachusetts Financial Services Co. has agreed to pay a $50 million penalty to settle Securities and Exchange Commission civil charges that it failed to disclose properly the payments it made to brokers to induce them to sell the company’s mutual funds, according to a person familiar with the matter.”

“Under the settlement, MFS would be the first among what could be many mutual-fund companies to face penalties related to the way they pay brokers to sell their funds. MFS, which will neither admit nor deny wrongdoing, will also pay a single dollar in so-called disgorgement, which usually represents the SEC’s determination of improper gains, according to the person familiar with the matter.”

“A spokesman for MFS, a unit of Sun Life Financial Inc., declined to comment, as did an SEC spokesman. An announcement of the settlement is expected as early as today, according to the person familiar with the matter.”

“Also yesterday, brokerage firm Edward D. Jones & Co. said in a public filing that the SEC was considering enforcement action against the company, following an inquiry into hefty payments it receives from the seven mutual funds it recommends most highly to customers.”

“The St. Louis company has also received subpoenas or requests for information on the payments from the Justice Department’s U.S. Attorney for the Eastern District of Missouri, the New York Stock Exchange, and the National Association of Securities Dealers, according to the filing. The NASD is also considering enforcement action, the filing said.”

“The settlement from MFS and scrutiny of Jones demonstrate a widening regulatory front in the scandals surrounding the mutual-fund business for the past six months. Until recently, the scandals have mostly been focused on selected customers and mutual-fund executives getting better prices for their fund shares or other lucrative trading advantages not available to the general public.”

“In fact, MFS recently agreed to pay $225 million — and cut management fees — to settle federal and state civil charges that accused the company of allowing sophisticated traders to profit from rapid trading, or market timing, in 11 of its mutual funds.”