JPMorgan class action lawsuit overview:
- Who: Plaintiffs Dan G. Bodea and Richard W. Quigley Jr. are seeking class certification against JPMorgan Securities LLC.
- Why: Plaintiffs allege JPMorgan froze interest rates on swept cash at 0.01%, while the federal funds rate rose above 5%, in breach of contractual promises.
- Where: The JPMorgan class action motion was filed in New York federal court.
Plaintiffs in a JPMorgan class action are asking a federal court to certify the case as a class action on behalf of at least 1.8 million brokerage and retirement account holders.
Dan G. Bodea and Richard W. Quigley, Jr. filed the motion for class certification on June 17 after the court substantially denied JPMorgan’s motion to dismiss in February.
The lawsuit centers on JPMorgan’s cash sweep program, which automatically moves idle cash from customers’ brokerage and retirement accounts into a deposit account at JPMorgan Chase Bank — the only sweep option available to customers.
JPMorgan’s contracts promised customers that interest rates on their cash sweep account balances “will vary based on business and economic conditions,” and that retirement account holders would earn “a reasonable rate of interest.”
Plaintiffs allege in the class action lawsuit that JPMorgan broke both promises by keeping sweep rates frozen at 0.01% from June 2020 through the present, even as the Federal Reserve raised its benchmark rate above 5%.
The lawsuit further alleges that JPMorgan paid its own advisory clients competitive rates tied to money market fund yields during the same period and paid market rates to unaffiliated brokers whose cash it also held — while cash sweep customers received virtually nothing.
Plaintiffs claim that JPMorgan previously offered money market funds to brokerage and retirement clients, then converted those balances to deposit sweeps, allowing JPMorgan to pocket the interest generated on client cash for itself.
JPMorgan had no process to check if retirement rates were fair
Plaintiffs argue the case is ideally suited for class certification because every affected customer signed the same contract and was paid the exact same frozen rate throughout the entire class period.
They claim that calculating each class member’s losses comes down to “simple arithmetic” — the difference between the rate JPMorgan promised and the “frozen” 0.01% it actually paid.
Plaintiffs added that JPMorgan’s own deposition witnesses admitted the company had no process in place to assess whether the rates paid to retirement account holders were reasonable, directly contradicting its contractual promise to pay “a reasonable rate of interest.”
Two other courts in the Southern District of New York recently granted class certification in similar cash sweep lawsuits, including cases against Oppenheimer, pending settlement approval, and Merrill Lynch.
The plaintiffs are asking the court to certify the class, appoint them as class representatives and appoint Berger Montague P.C. as class counsel and Bernstein Litowitz Berger & Grossmann LLP as class local counsel.
In another JPMorgan class action, the company is accused of violating the Employee Retirement Income Security Act by unfairly targeting employees based on their health status, such as tobacco use.
What do you think of allegations made against JPMorgan in this cash sweep account lawsuit? Let us know in the comments.
The plaintiffs are represented by Michael Dell’Angelo, Alex B. Heller, Joseph E. Samuel Jr. and Radha Nagamani Raghavan of Berger Montague P.C., and Salvatore J. Graziano, John Rizio-Hamilton, Adam H. Wierzbowski and Michael D. Blatchley of Bernstein Litowitz Berger & Grossmann LLP.
The JPMorgan class action lawsuit is In re JP Morgan Chase Cash Sweep Program, Case No. 1:24-cv-06404-LGS-SN, in the U.S. District Court for the Southern District of New York.
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