Bank Cash Sweep Class Action Lawsuits (2024)
The SEC is investigating massive banks like Morgan Stanley and Wells Fargo for “systematically cheating customers out of billions of dollars of interest payments,” the Financial Times reports.
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What are the 2024 Cash Sweep Lawsuits about?
Consumers around the country are filing lawsuits claiming that their financial advisors breached their contracts and obligations to them by putting them in “cash sweep accounts” that pay unreasonably low interest rates.
Lawsuits have been filed against a number of banks and brokerage firms for allegedly enriching themselves at the expense of their clients and not providing reasonable rates of returns for customers. One lawsuit against Morgan Stanley states that the bank paid some of its clients interest as low as 0.05% while it received interest rates of up to 5.63%. Another similar lawsuit against LPL Financial states that it paid customers as low as 0.35%, a rate that is “significantly lower than cash sweep programs at other brokerage and advisory firms” that offer closer to 4.6%, according to the lawsuit.
If you have an account at one of the following banks or brokerage firms, you may be impacted:
- Wells Fargo
- Morgan Stanley
- LPL Financial
- Merrill Lynch
- Ameriprise
- E*Trade
- Edward Jones
- Fidelity
- J.P. Morgan
- Raymond James
- UBS
How do I know if I have a cash sweep account?
Many major banks have some form of a cash sweep program. In these types of accounts, banks or brokerages automatically move, or “sweep,” otherwise uninvested money into interest-bearing accounts. Banks and brokerage firms often refer to their cash sweep programs with specific names:
- LPL Financial has an “ICA Program” and “DCA Program”
- Morgan Stanley has a “Morgan Stanley Bank Deposit Program”
- Ameriprise has an “Ameriprise Insured Money Market Account” and “Ameriprise Bank Insured Sweep Account”
- Wells Fargo has a “Standard Bank Deposit Sweep,” “Expanded Bank Deposit Sweep,” and “Money Market Fund Sweep”
- Bank of America/Merrill Lynch has a “Merrill Lynch Bank Deposit Program”
Have a bank account and worried you’re impacted?
What are my rights as an investor with a cash sweep account?
According to the Financial Industry Regulatory Authority (“FINRA”) the SEC’s Regulation Best Interest (“Reg BI”) establishes a “best interest” standard for certain financial professionals and advisors, meaning they have to do what is in their client’s best interest and act as a “fiduciary” when it comes to recommending financial products.
The SEC is now investigating whether the financial advisors at banks and brokerage firms like Wells Fargo and Morgan Stanley had an obligation to advise clients that they could have generated a higher return if they moved their cash into other accounts, instead of the cash sweep accounts the customers were put in.
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Our consumer advocate team
Rosemary Rivas
Rosemary is devoted to obtaining justice for consumers in lawsuits involving claims of false advertising, defective products, and privacy violations.
View full profileDave Stein
Dave represents clients in cases nationwide, ranging from securities and financial fraud cases to product liability, privacy, and data breach suits.
View full profileRosanne Mah
Rosanne represents consumers in complex class action cases involving deceptive or misleading practices, false advertising, and data/privacy issues.
View full profileRelated Articles on the Cash Sweep Lawsuit Investigations
Read our press release on our investigations: