A growing number of US banks are accused of routinely misleading customers in a push to pocket billions of dollars.
JPMorgan Chase is now facing a proposed class action lawsuit for allegedly shifting customers’ idle cash into accounts with extremely low interest rates without proper disclosure.
The bank joins Wells Fargo, Bank of America and others accused of using cash sweep programs to quietly move idle investment money into accounts with near-zero interest rates.
In his class-action suit against JPMorgan, Illinois resident Dan Bodea alleges the bank concealed its actions and failed to adequately explain how its cash sweep program works in order to “generate substantial revenue for themselves with their customers’ cash and beneficial returns on such cash, while paying their customers only a small fraction of those returns.”
Recent filings show the U.S. Securities and Exchange Commission is probing Wells Fargo, Bank of America and Morgan Stanley over similar allegations.
Meanwhile, Wells Fargo, Charles Schwab, Morgan Stanley, Ameriprise, LPL Financial, UBS and Bank of America’s Merrill Lynch subsidiary are now facing various cash sweep-related legal battles.
Most banks, including JPMorgan, have declined to comment on the matter.
LPL Financial has denied the allegations and says it will “vigorously” defend itself in court.
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