Bank of America class action alleges bank made misleading statements about Merrill Lynch cash sweep program

Bank of America class action lawsuit overview: 

• Who: Safron Capital Corp. filed a class action lawsuit against Bank of America Corporation and Merrill Lynch, Pierce, Fenner & Smith Incorporated. 
• Why: Safron Capital Corp. claims Bank of America made misleading statements to customers about its Merrill Lynch cash sweep program. 
• Where: The class action lawsuit was filed in New York federal court. 

Bank of America made materially misleading statements to customers about its Merrill Lynch cash sweep program, a new class action lawsuit alleges. 

Plaintiff Safron Capital Corp. claims Bank of America failed to disclose that it and its wholly owned subsidiary Merrill Lynch, Pierce, Fenner & Smith Inc. created the cash sweep program to enrich themselves. 

Safron argues Bank of America used the cash sweep program to enrich itself by paying “unreasonably low” interest rates to customers in order to increase their own benefits from the cash sweep program. 

“Under the Sweep Program, Merrill swept customers’ idle cash deposits into separate accounts that were highly lucrative for Defendants and their affiliate banks but paid unreasonably low, below-market interest rates to customers,” the Bank of America class action says. 

Safron wants to represent nationwide class of consumers who had cash deposits or balances in account Tiers 1-4 of Bank of America’s cash sweep program with Merrill Lynch. 

Bank of America used deposits to fund current, new lending, class action claims

Safron argues Bank of America benefited from the cash sweep program by holding any cash balances in the bank deposit accounts affiliated with the program, receiving increased compensation based on achieving a number of strategic objectives and using bank deposits to fund current and new lending, investment and other business activities. 

“The participation of the Bank Affiliates in the Cash Sweep Program increases their respective deposits and accordingly overall profits,” the class action says. 

Safron claims Bank of America and its Merrill Lynch subsidiary are guilty of unjust enrichment, breach of fiduciary duty, gross negligence and negligent misrepresentations and omissions, among other things, and violations of the Racketeer Influenced and Corrupt Organizations Act, the Investment Advisers Act of 1940 and New York General Business Law. 

The plaintiff demands a jury trial and requests declaratory and injunctive relief and an award of compensatory and treble damages for themselves and all class members. 

A consumer filed a similar class action lawsuit against JPMorgan Chase Co. and JPMorgan Securities LLC earlier this year over claims they swept customers’ uninvested cash into Chase bank accounts with low interest rates. 

Did you have cash deposits or balances in account Tier 1-4 of Bank of America’s cash sweep program with Merrill Lynch? Let us know in the comments.

The plaintiffs are represented by Stephen R. Astley, Andrew T. Rees and Rene A. Gonzalez of Robbins Geller Rudman & Dowd LLP and Jack G. Fruchter of Abraham Fruchter & Twersky LLP. 

The Bank of America class action lawsuit is Safron Capital Corp., et al. v. Bank of America Corporation, et al., Case No. 1:24-cv-07743, in the U.S. District Court for the Southern District of New York.

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