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American Portfolios Ordered to Pay $4.6 Million in Restitution Over Cash Sweep Program Disclosures

Posted on February 18th, 2026 at 10:50 AM
American Portfolios Ordered to Pay $4.6 Million in Restitution Over Cash Sweep Program Disclosures

From the desk of Jim Eccleston at Eccleston Law

The Financial Industry Regulatory Authority (FINRA) has ordered American Portfolios Financial Services to return $4.6 million to customers and pay monetary sanctions after determining that the firm overcharged investors and failed to properly disclose how it generated revenue through a cash sweep program.

According to InvestmentNews, the resolution stems from the firm’s bank deposit program, which automatically transferred uninvested customer cash into interest-bearing, FDIC-insured accounts. The matter resolved through a FINRA Acceptance, Waiver and Consent (AWC) letter. FINRA determined that from April 2018 through September 2022, American Portfolios calculated customer fees using a method that conflicted with its disclosures. The firm represented that it would calculate fees using a formula tied to the Federal Funds Target rate. However, FINRA found that the firm instead relied on competitive interest rates to determine customer returns and retained excess interest, which reduced investor earnings.

InvestmentNews reports that the regulator concluded that this practice resulted in more than $3 million in excess fees charged to customers. FINRA also found that during periods of rising interest rates, the firm retained approximately $1.25 million in additional interest without clearly informing investors. FINRA stated that the undisclosed retention of interest constituted a material fact that customers should have known when evaluating participation in the program.

InvestmentNews reports that approximately 85,000 customers participated in the bank deposit program during the relevant period, making the enforcement action one of FINRA’s more significant restitution matters involving cash sweep arrangements.

American Portfolios consented to FINRA’s findings in the AWC without admitting or denying its findings.

 

Eccleston Law LLC represents investors and financial advisors nationwide in securities, employment, transition, regulatory, and disciplinary matters.

Tags: eccleston, eccleston law, american portfolios

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