NEW YORK – JPMorgan Chase (NYSE: JPM) has been accused in a new lawsuit of sweeping customers’ idle cash into accounts with “unreasonably” low interest rates.
The proposed class action against the largest U.S. bank was filed Friday night in Manhattan federal court.
It followed similar lawsuits against other banks and brokerages including Ameriprise (NYSE: AMP), LPL Financial (NASDAQ: LPLA), Morgan Stanley (NYSE: MS), UBS Group (NYSE: UBS), and Wells Fargo (NYSE: WFC).
JPMorgan declined to comment on Monday.
Illinois resident Dan Bodea alleged that JPMorgan (NYSE: JPM) used its cash sweep program to shortchange customers while pretending to act as their fiduciary and reaping “outsized benefits” for itself.
The lawsuit seeks unspecified compensatory and punitive damages for JPMorgan’s alleged breaches of fiduciary duty, gross negligence, and unjust enrichment.
Bodea did not specify JPMorgan’s interest rates on uninvested cash or how its payouts compare with those of rivals.
Some brokerages offer sweep rates well above 4%, at a time when U.S. Treasury bills maturing within three months still yield more than 5%.
Lawyers for Bodea did not immediately respond to requests for comment.
Morgan Stanley and Wells Fargo said this month that the U.S. Securities and Exchange Commission has been investigating their cash sweep practices, and Wells Fargo said it was in settlement talks.
Last month, Wells Fargo said it increased pricing on sweep deposits late in the second quarter, and that this would likely lower future net interest income.
The case is Bodea v JPMorgan Chase & Co et al, U.S. District Court, Southern District of New York, No. 24-06404.
(Source: Reuters)
