Barron's: JPMorgan Sued on Sweeps
Barron's writes that, "JPMorgan Is Latest Brokerage Hit With Cash-Sweep Lawsuit." Their article states, "JPMorgan Chase and its subsidiary J.P. Morgan Securities are the latest targets of a proposed class-action lawsuit involving their interest payments on clients’ uninvested cash. The complaint, brought by Illinois resident Dan Bodea, alleges that J.P. Morgan Securities routinely swept clients' cash into accounts at the parent bank that paid 'unreasonably low' interest rates, while the company benefited from cheap access to those funds. JPMorgan declined to comment on the case." They write, "The lawsuit is the latest in a series of proposed class actions against brokerage firms involving their cash-sweep programs. Earlier cases have taken aim at Ameriprise, LPL Financial, Morgan Stanley, UBS, and Wells Fargo. Regulators have also taken an interest in the issue, with Morgan Stanley and Wells Fargo saying they have been responding to inquiries from the Securities and Exchange Commission about their cash-sweep programs." Barron's adds, "The complaint against JPMorgan alleges that the firm misled customers about the nature of its program, which it says the defendants used 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.' The plaintiff alleges that JPMorgan's cash program amounted to a breach of fiduciary duty, breach of contract, and was the source of unjust enrichment, among other violations. The suit is seeking damages, interest, and an injunction against JPMorgan." For more on recent `Brokerage Sweep News, see these CraneData.com stories: "Law Firm Says Bolster Disclosures, Rates on Sweeps" (8/13/24), "Barron's: BofA Cites Risk from Sweeps" (8/8/24), "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).
