Ameriprise class action lawsuit overview:
- Who: Plaintiff Mark Frey filed a class action lawsuit against Ameriprise.
- Why: The Ameriprise cash sweep program allegedly unfairly benefits the bank, rather than its customers.
- Where: The Ameriprise class action lawsuit was filed in Minnesota federal court.
An Ameriprise class action lawsuit alleges the bank breached its fiduciary duty by recommending that retail and investment customers hold money in a โcash sweep accountโ that benefits the bank instead of its customers.
A cash sweep account is a type of account that holds uninvested money and โsweepsโ it into an interest-bearing account to ensure the money generates some income, the Ameriprise class action lawsuit explains.
Plaintiff Mark Frey claims Ameriprise failed to negotiate higher interest rates for its sweep accounts, causing customers to earn next to nothing while the bank is able to โgenerate massive revenues.โ
Ameriprise cash sweep accounts earn less than those from competing banks, plaintiff says
The Federal Open Market Committee sets the federal fund rates defining the interest rate at which banks lend each other money. In recent years, the federal fund rate was so low that the amount of interest expected to be earned on cash sweeps was nearly zero, according to the Ameriprise class action lawsuit.
In 2022, the federal funds rate increased considerably and banks reportedly increased yields so brokerages should have been able to negotiate higher rates of return on uninvested cash from affiliated banks. However, Ameriprise failed to negotiate higher rates for customers, allegedly keeping more money for itself.
The Ameriprise class action lawsuit notes that competing banks sweep uninvested cash into money market funds that yield close to 5% interest, while Ameriprise cash sweep customers earn almost nothing.
Frey says he holds advisory and traditional brokerage accounts with Ameriprise. The bank reportedly automatically enrolled him in an Ameriprise cash sweep account, sweeping his uninvested cash into unaffiliated banks selected by Ameriprise.
โBy negotiating substantially lower rates for the cash sweep programs it automatically placed plaintiff and class members into, Ameriprise did not act in its customersโ best interests,โ the Ameriprise class action lawsuit claims.
Instead, Ameriprise allegedly prioritized its own interests, โmaking substantial net income revenue at its customersโ expense.โ
The Ameriprise cash sweep lawsuit asserts claims for breach of fiduciary duty, gross negligence, breach of the implied covenant of good faith and fair dealing, breach of contract and unjust enrichment.
A growing number of class action lawsuits have been filed against banks for allegedly unfairly charging customers fees when they deposit checks that bounce.
Do you have cash deposits or balances in the Ameriprise cash sweep program? Tell us about your experience in the comments.
Frey is represented by E. Michelle Drake and John G. Albanese of Berger Montague PC and Rosemary M. Rivas, Rosanne L. Mah and Brian E. Johnson of Gibbs Law Group LLP.
The Ameriprise cash sweep class action lawsuit is Mark Frey v. Ameriprise Financial Inc., et al., Case No. 0:24-cv-03360, in the U.S. District Court for the District of Minnesota.
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One thought on Ameriprise class action claims cash sweep program unfairly benefits bank
I have been wondering about that for sometime, wondering why there were invest-able dollars in that sweep account and the very low interest rates compared to outside banks.