Tr?id=566623520170033&ev=PageView&noscript=1

Class Action Suits Target Major Banks Over Cash Sweep Programs

Posted on November 27th, 2024 at 1:04 PM
Class Action Suits Target Major Banks Over Cash Sweep Programs

From the desk of Jim Eccleston at Eccleston Law

Wells Fargo, Merrill Lynch, and Morgan Stanley face class action lawsuits alleging they exploited cash sweep programs to generate “massive revenue” at clients' expense. According to WealthManagement, those cases add to recent complaints over similar practices against LPL, Raymond James, Ameriprise, and UBS.

The complaints, filed in New York’s Southern District by Safron Capital Corporation and Brickman Investments, assert that the banks automatically swept uninvested client funds into low-interest-bearing accounts within affiliated banks, creating a conflict of interest. Plaintiffs argue that, by doing so, the banks earned profit from the spread, or difference, between the interest paid to clients and the banks' income on these deposits. This practice, they allege, misled clients into thinking they were receiving competitive interest rates while, in reality, rates on these sweep accounts were significantly lower than those offered through direct deposits or available from competitors.

As reported by WealthManagement, the Wells Fargo’s complaint alleges that the firm breached its fiduciary duty to advisory clients and violated the SEC’s Regulation Best Interest rule by failing to disclose the financial implications of its sweep program fully. The firms are denying wrongdoing. Morgan Stanley, for example, is claiming that its sweep program had been thoroughly disclosed and that clients provided consent upon account opening.

 

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

Tags: eccleston, eccleston law

Return to Archive

TESTIMONIALS

Previous
Next
Quotes Bigger

Thank You from the bottom of our hearts for all you have done for us. When we realized this was a very bad investment - we did not know where to turn for help. Then we received your name. When we called you - you were so kind to us and then agreed to help us. For this we are so very grateful. The world would be a much nicer place if there were more people like the two of you in it. We will always remember all the help and kindness you have shown us. Thank you so very very much for everything.

Wayne and Judy S.

LATEST NEWS AND ARTICLES

L
May 21, 2026
Edward Jones Faces Federal Privacy Lawsuits Over Alleged Data Sharing With Tech Companies

Edward Jones is facing multiple lawsuits alleging that the firm improperly shared clients' personal and financial information with third-party technology companies for targeted advertising purposes, according to reporting by Financial Planning.

1779287606 Law
May 20, 2026
FINRA Sanctions Ameriprise for Supervisory Failures in Variable Annuity Exchanges

The Financial Industry Regulatory Authority (FINRA) has fined Ameriprise Financial Services and ordered restitution to resolve allegations that the firm failed to adequately supervise certain variable annuity exchange recommendations.

1779216500 Law
May 19, 2026
SEC Fines Ally Invest Advisors Over Undisclosed Robo-Advisor Conflict

The Securities and Exchange Commission (SEC) imposed a $500,000 penalty on Ally Invest Advisors after finding that the firm failed to disclose a material conflict of interest tied to its Cash-Enhanced robo-advisor accounts.