Cash sweeps class action lawsuits overview:
- Who: Consumers recently filed class action lawsuits against Charles Schwab, UBS Financial, JPMorgan and Ameriprise.
- Why: The class action lawsuits claim the financial institutions have cash sweep programs only benefit themselves at the expense of their customers.
- Where: The class action lawsuits were filed in U.S. federal courts.
Consumers recently filed several class action lawsuits against financial institutions claiming the companies’ cash sweep programs shortchanged them.
Cash sweep programs are a service most banks and brokers offer that allows them to automatically move excess cash from a brokerage account into either a bank deposit account or money market fund to earn interest, the class action lawsuits state.
The idea is to ensure uninvested money generates at least some income through an interest-bearing account, according to the cash sweeps class actions. The consumers behind the recent complaints argue certain banks use cash sweep programs to benefit themselves at the expense of customers.
Class action says Charles Schwab shortchanged customers with cash sweep program
A trio of consumers filed a class action lawsuit against Charles Schwab over claims the company shortchanged its customers with its cash sweep program.
The class action lawsuit argues Charles Schwab benefited at the expense of its customers by allegedly taking the vast majority of compensation its customers earned.
The consumers claim Charles Schwab created the program ostensibly to help consumers but, in reality, used the program to “obtain outsized benefits for themselves from its customers’ cash.”
“Defendants’ 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,” the Charles Schwab class action says.
UBS Financial breached fiduciary duty with cash sweep program, class action says
A consumer filed a class action lawsuit against UBS Financial Services earlier this month over claims the financial services company shortchanged customers enrolled in its cash sweep program.
The class action lawsuit argues UBS breached its fiduciary duty because its cash sweep program disproportionately benefits itself rather than its customers.
Despite being in the position of a fiduciary agent for its customers, UBS ultimately negotiated transactions in a way that shifted compensation to its affiliated banks, the UBS class action alleges.
“UBS’s disclosures contained a multitude of material misrepresentations and omissions that inaccurately presented the terms and operation of the program to plaintiff and members of the proposed class,” the UBS class action says.
JPMorgan obtains ‘outsized benefits’ with cash sweep program, class action claims
A consumer filed a class action lawsuit against JPMorgan Chase & Co. in August over claims the bank obtains “outsized benefits” for itself at the expense of its customers through its cash sweep program.
The class action lawsuit argues JPMorgan acknowledged via its customer agreement its role as a customer agent yet allegedly used its cash sweep program to serve its own interests and not that of its customers.
The consumer claims JPMorgan kept the majority of its customers’ cash involved in the cash sweep program while allegedly concealing the benefits it received.
“(JPMorgan) failed to adequately, if at all, disclose to its customers that, as to the bank deposit sweep program it was an agent serving two masters. Those masters are its customers and affiliated companies,” the JPMorgan class action says.
Ameriprise unfairly benefits from own cash sweep program, class action says
A consumer filed a class action lawsuit against Ameriprise last month over claims the financial services firm created a cash sweep program that unfairly benefits itself rather than customers.
The class action lawsuit argues Ameriprise failed to negotiate higher interest rates for accounts involved in its cash sweep program, causing customers to earn almost nothing while the bank generated “massive revenues.”
“By negotiating substantially lower rates for the cash sweep programs it automatically placed plaintiff and class members into, Ameriprise did not act in its customers’ best interests,” the Ameriprise class action says.
The consumer argues Ameriprise’s cash sweep program also lags behind that of its competitor banks, which he claims have programs that sweep uninvested cash into money market funds yielding close to 5% interest, while Ameriprise customers earn almost nothing.
Has your bank benefited itself at your expense via a cash sweep program? Let us know in the comments.
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One thought on Consumers file cash sweeps class actions against banks
I’d like representation regarding a similar “cash sweep” program by a broker not listed above. This is in addition to countless other acts unfairly and disproportionately benefitting the brokerage and essentially locking and trapping consumer funds while the brokerage unfairly restricts consumer access to their funds and failing to review and address consumer security complaints in a timely fashion. Often no response is even made to the consumer. This is in addition to restricting consumer access to historical transaction data.