JPMorgan Chase is sued over low rates on cash sweeps

Ameriprise Financial

26/08/2024 19:19

NEW YORK, Aug 26 (Reuters) - JPMorgan Chase  JPM.N  has
been accused in a new lawsuit of sweeping customers' idle cash
into accounts with "unreasonably" low interest rates.
    The proposed class action against the largest U.S. bank was
filed on Friday night in Manhattan federal court.
    It followed similar lawsuits against other banks and
brokerages including Ameriprise  AMP.N , LPL Financial  LPLA.O ,
Morgan Stanley  MS.N , UBS  UBSG.S  and Wells Fargo  WFC.N .
    JPMorgan declined to comment on Monday.
    Illinois resident Dan Bodea alleged that JPMorgan has used
its cash sweep program to shortchange customers, while
pretending to act as their fiduciary and reaping "outsized
benefits" for itself.
    The lawsuit seeks unspecified compensatory and punitive
damages for JPMorgan's alleged breaches of fiduciary duty, gross
negligence and unjust enrichment.
    Bodea did not specify JPMorgan's interest rates on
uninvested cash or how its payouts compare with those of rivals.
    Some brokerages offer sweep rates well above 4%, at a time
U.S. Treasury bills maturing within three months still yield
more than 5%.
    Lawyers for Bodea did not immediately respond to requests
for comment. 
    Morgan Stanley and Wells Fargo said this month that the U.S.
Securities and Exchange Commission has been investigating their
cash sweep practices, and Wells Fargo said it was in settlement
talks.
    Last month, Wells Fargo said it increased pricing on sweep
deposits late in the second quarter, and that this would likely
lower future net interest income.
    The case is Bodea v JPMorgan Chase & Co et al, U.S. District
Court, Southern District of New York, No. 24-06404.

 (Reporting by Jonathan Stempel in New York; Editing by Bill
Berkrot)
 ((jon.stempel@thomsonreuters.com; +1 646 223 6317; Reuters
Messaging: jon.stempel.thomsonreuters.com@reuters.net))