Reuters Says Merrill Settles Sweep Suit
Reuters writes, "BofA's Merrill Lynch settles cash sweep case for $39 million, must face second lawsuit." The article explains, "Bank of America's Merrill Lynch unit will pay $39 million to settle a class action claiming it paid brokerage customers near-zero interest rates instead of market rates on idle cash in their retirement accounts. The preliminary settlement was filed late Wednesday in Manhattan federal court and requires approval by US District Judge Valerie Caproni. In a separate case, US District Judge Margaret Garnett in Manhattan ordered Merrill Lynch to face most of a similar proposed class action covering retirement and non-retirement accounts. Her decision was dated Wednesday and made public on Thursday." The piece tells us, "Many large banks and brokerages have been sued for allegedly 'sweeping' customers' cash into accounts that paid low or near-zero interest instead of market rates, boosting profits. These lawsuits proliferated in 2023 and 2024 when interest rates were rising." It states, "The settlement resolved claims by holders of Merrill Edge online accounts between December 15, 2016 and March 15, 2020 that allegedly paid 0.05% to 0.14% while other brokerages paid their customers about 2%. Merrill Lynch denied wrongdoing. It agreed in January 2025 to pay $25 million to settle cash sweep claims by the US Securities and Exchange Commission, without admitting wrongdoing." Reuters adds, "Lawsuits over low-yielding sweep accounts have had mixed success. In February, a third Manhattan federal judge said JPMorgan Chase must face part of one such lawsuit. On September 18, a fourth Manhattan federal judge granted final approval to a $70 million settlement with Oppenheimer & Co." For more on Brokerage Sweep lawsuits, see these Crane Data News stories: "Reuters on JPMorgan Sweeps Lawsuit (2/19/26), "Central Bank of Ireland on Fund Regulations; Brokerage Sweeps Lawsuits (8/5/24), "Tradeweb Completes ICD Acquisition; AdvisorHub on Wells Sweep Suit (8/2/24), "IN: Ameriprise Sued Over Sweeps" (7/31/24), "Federated Hermes' Donahue, Cunningham Call Hits Sweeps, Flows, Rates" (7/29/24), "Ameriprise, Raymond James Discuss Sweeps Issues on Earnings Call Q&As" (7/26/24), "Barron's Writes on Pressure on Sweeps" (7/25/24), "WSJ, Investment News on Brokerage Deposit, Advisory Sweep Pressures" (7/19/24), "Schwab, BlackRock Q2 Earnings: Cash Migration Slowing, But Continues" (7/17/24) and "Cash of the Titans Part II: Merrill Hit By Lawsuit Over Brokerage Sweeps (9/3/19).
