Merrill Lynch class action settlement overview:
- Who: Bank of America’s Merrill Lynch unit has agreed to pay $39 million to settle claims brought by retirement account holders.
- Why: The class action lawsuit alleged Merrill Lynch swept idle retirement account cash into low-interest accounts without paying customers reasonable market rates.
- Where: The Merrill Lynch settlement was reached in New York federal court.
- How to file a claim: Claim-filing instructions are not yet available. Sign up for our free newsletter to receive updates when details are announced. In the meantime, browse our list of open settlements to find other claims you may qualify for.
Merrill Lynch has agreed to pay $39 million to settle a class action lawsuit alleging the wealth management company failed to pay reasonable interest on cash held in customers’ retirement accounts.
The proposed class action settlement would resolve claims brought by account holders who maintained Merrill Edge retirement accounts with cash balances swept into Merrill Lynch’s Retirement Asset Savings Program between Dec. 15, 2016, and March 15, 2020. The parties reached the agreement on Sept. 1, avoiding a trial that had been scheduled to begin on Oct. 13.
The lawsuit alleges Merrill Lynch moved customers’ idle retirement funds into low-interest cash sweep accounts rather than paying the rates customers were entitled to under their agreements with the company.
According to plaintiff Sarah Valelly, Merrill Lynch Direct Deposit sweep accounts paid annual percentage yields ranging from 0.05% to 0.14%. The complaint alleges federal Securities and Exchange Commission regulations require brokerage firms to obtain a customer’s prior written affirmative consent before sweeping cash into affiliated accounts or entities.
Merrill Lynch settlement would resolve retirement account claims
Valelly claims Merrill Lynch failed to obtain the required consent before sweeping customers’ funds. She also alleges the company buried disclosures about the cash sweep accounts deep within its agreements.
If approved, the $39 million settlement would resolve the claims involving customers whose retirement account cash was swept through Merrill Lynch’s program during the covered period, Law360 reports.
Class counsel plans to ask the court for attorneys’ fees of no more than 30% of the Merrill Lynch settlement fund, or $11.7 million, along with up to $2.1 million in litigation costs. Counsel will also request a service award of no more than $15,000 for Valelly.
The class action lawsuit was filed in 2019 and has proceeded through years of litigation. According to Valelly’s counsel, the case was the first known lawsuit to address a broker’s contractual obligation to pay a reasonable interest rate on retirement cash sweep accounts. Counsel said the case subsequently prompted similar litigation.
Merrill Lynch has not admitted wrongdoing as part of the settlement. The company’s attorneys did not immediately respond to a request for comment.
Meanwhile, Visa and Mastercard agreed to a combined $167.5 million class action settlement to resolve claims that they violated federal and state antitrust laws by restricting independent ATM operators from charging different ATM surcharges.
What do you think about this Merrill Lynch settlement and the allegations around cash sweep accounts? Let us know in the comments.
The plaintiff is represented by Robert C. Finkel, Adam J. Blander and Emer C. Burke of Wolf Popper LLP.
The Merrill Lynch class action lawsuit is Valelly v. Merrill Lynch, Pierce, Fenner & Smith Inc., Case No. 1:19-cv-07998, U.S. District Court for the Southern District of New York.
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