Cash Sweep Programs Lawsuit - Introduction

You may be eligible to start a cash sweep lawsuit entitling you to compensation. Recent cash sweep program lawsuits have accused major brokerage firms and banks, like:

• J.P. Morgan,
• Morgan Stanley,
• Wells Fargo,
• LPL Financial, and
• Merrill Lynch,

of breaching their fiduciary duties to customers by failing to pay them a reasonable rate of interest on their cash sweep program accounts and misleading customers into using these accounts. These and other banks and brokers, in the meantime, have profited by keeping the net interest earned on these accounts in breach of their fiduciary duties, contractual obligations, and statutory duties, resulting in their unjust enrichment. Are financial institutions profiting at your expense? If you’ve been affected, you may be owed compensation. Call The Grant Law Firm Now at (212) 292-4441

What is a Cash Sweep Program Account?

A cash sweep program account is an account offered by brokerage firms and banks through which they transfer customers’ uninvested cash overnight into high-interest-bearing accounts, often at affiliated banks. While brokers and banks mislead customers into believing that this is a means for earning reasonable rates of interest on their uninvested funds, many investors are unaware that their bank or broker is being paid high rates of interest on this uninvested cash while paying them unfairly low or paltry rates of interest on the same money. By doing this, banks and brokerage firms are being unjustly enriched by earning the net interest income for their own financial gain.

Regulatory Scrutiny: The SEC Fines Banks and Brokers

In early January 2025, the Securities and Exchange Commission announced that it had fined Wells Fargo and Merrill Lynch about $60 million for this practice. The SEC alleged that Wells Fargo and Merrill Lynch failed to adopt and implement written policies and procedures designed to prevent violations of the Advisors Act, had made misleading statements to customers so that they believed that the cash sweep program account was the only option for most advisory clients, and failed to set interest rates at a reasonable level during a time of increasing rates.

Cash Sweep Lawsuits Against Financial Institutions

A number of cash sweep class actions have been filed against major brokerage firms and banks, including Ameriprise Financial, LPL Financial, Charles Schwab, Bank of America, and JPMorgan Chase & Co.

These cases allege, among other things, that the banks and brokers:

• Breached their fiduciary duties to customers by failing to pay reasonable rates of interest on these sweep accounts, especially retirement accounts.
• Breached their contractual duties to customers for failing to act in their clients' best interests by pocketing the net interest paid on customers’ uninvested cash.
• Were unjustly enriched by keeping the difference in the interest that was paid on these uninvested funds, particularly in the current high-interest rate environment.

Investigation of Raymond James

The Grant Law Firm is investigating a potential case against Raymond James based on allegations that its cash sweep program paid its customers, particularly those with retirement accounts, unreasonably low interest rates or paltry rates of return while earning far higher interest on customers’ uninvested cash. Raymond James has a primary cash sweep program for its brokerage clients known as the Raymond James Bank Deposit Program, through which it contracts with certain “priority” or affiliated banks. If a client has an ERISA account or managed IRA, the customer’s cash is kept in the Raymond James Bank Deposit Program – Raymond James Bank Only program. Customers may also enroll in the Client Interest Program. Each of these programs uses the same interest rate tier, which it is believed was not reasonable or consistent with Raymond James’ duties to its clients to act as a fiduciary and/or to act in the customer’s best interests.

Interest Rates Paid by Raymond James

For example, Raymond James paid only 0.25% interest on cash from $0 to $99,999, and 0.50% interest on cash from $100,000 to $249,999 during a period of rising interest rates. Meanwhile, Vanguard and Interactive Brokers paid much higher rates for the same amount of uninvested cash. At the same time, Raymond James had a contractual duty to customers to pay a reasonable rate of interest on these accounts.

Florida Investors: Potential Legal Claims

The Grant Law Firm is investigating potential claims of Florida residents

The Grant Law Firm is investigating potential cases on behalf of Florida residents who may have been paid an unreasonably low rate of interest on their Raymond James cash sweep accounts. If you are a Florida resident and have or had a Raymond James account, The Grant Law Firm can assess whether you have a claim and whether you are owed compensation. Let the team at The Grant Law Firm explore your options with you.

Taking Legal Action Now Can Be Crucial

Contact us now or Call The Grant Law Firm at (212) 292-4441 for a free consultation.