Charles Schwab cash sweep class action lawsuit overview:ย
- Who: Mary Loughran, Rosemary Orlando and Edward Carr filed a class action lawsuit against The Charles Schwab Corp. and Charles Schwab & Co. Inc.ย
- Why: Loughran, Orlando and Carr claim Charles Schwab shortchanged customers with its so-called cash sweep program.ย
- Where: The Charles Schwab class action lawsuit was filed in California federal court.ย
A new class action lawsuit claims that Charles Schwab benefits itself at the expense of its customers with its so-called cash sweep program.ย
Plaintiffโs Mary Loughran, Rosemary Orlando and Edward Carrโs class action claims Charles Schwab takes the โvast majorityโ of compensation earned from the cash of its customers that it deposits into accounts at one of its affiliated banks.ย
Loughran, Orlando and Carr argue Charles Schwab implemented the cash sweep program to โostensiblyโ offer customers an โinterest paying vehicleโ to hold their cash in a way that offers FDIC insurance.ย
In reality, however, the class action argues Charles Schwab designed and operated the program to โobtain outsized benefits for themselves from its customersโ cash.โย
โDefendantsโ actions in designing, implementing, and operating the Program to benefit itself at the expense of its customers constitutes a breach of the fiduciary duties that CS&Co owes to its customers,โ the Charles Schwab class action says.ย
Loughran, Orlando and Carr want to represent a nationwide class of consumers who held cash positions in accounts custodied by Charles Schwab, and whose cash was subject to its cash sweep program.
Class action says Charles Schwab failed to adequately disclose it was โserving two mastersโย
Loughran, Orlando and Carr argue Charles Schwab failed to adequately โ if at all โย disclose to its customers that it was โan agent serving two mastersโ with its cash sweep program.ย
โDefendants shortchanged their customers for the benefit of themselves and their affiliates by negotiating with its Affiliated Banks one-sided transactions related to the Program,โ the Charles Schwab class action says.ย
The class action lawsuit claims Charles Schwab is guilty of gross negligence, breach of fiduciary duty and unjust enrichment, and in violation of Californiaโs Unfair Competition Law.ย
However, a Schwab PR spokesperson tells Top Class Actions, โAllegations arenโt facts.โ
โWhen clients choose a self-directed approach, they have full control over their assets and cash management decisions,โ the spokesperson says. โThat means they have access to a wide range of cash solutions and information to help them choose the solutions that best fit their individual needs. Our offerings provide safety and liquidity to meet everyday cash needs, and our clients value the option of FDIC insurance protection combined with convenient access to their cash.โย ย
The plaintiffs demand a jury trial and request injunctive relief along with an award of actual and punitive damages for themselves and all class members.ย
Similar class action lawsuits were recently filed against Ameriprise and JPMorgan over claims the financial institutions shortchanged customers while unfairly benefitting from their respective cash sweep programs.ย
Have you held cash that was subjected to Charles Schwabโs cash sweep program? Let us know in the comments.
The plaintiffs are represented by Sophia M. Rios, Michael DellโAngelo and Andrew D. Abramowitz of Berger Montague PC and Alan L. Rosca, Jonathan A. Korte and Paul J. Scarlato of Rosca Scarlato LLC
The Charles Schwab cash sweep class action lawsuit is Loughran, et al. v. The Charles Schwab Corporation, et al., Case No. 2:24-cv-07344, in the U.S. District Court for the Central District of California.
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One thought on Charles Schwab class action alleges bank receives โoutsized benefitsโ from cash sweep programs
Yes I have an account with Charles Schawb. Iโm feeling like something has been wrong. Iโve had horrible experience with CS
1. Constant being miss informed
2. Inverted charts
3 price action manipulation. Meaning charts would react to my entry/ order
4. Not being allowed to open another FX account
5. FX Departmaent unfairly managing my account due to its small size.
6. All these problems I am having where carried over from TD Ameลitrade. It seems that when the companies merged they check to clean houses.