Crane Data published its latest Weekly Money Fund Portfolio Holdings statistics Tuesday, which track a shifting subset of our monthly Portfolio Holdings collection. The most recent cut (with data as of May 16) includes Holdings information from 62 money funds (unchanged from two weeks ago), or $3.623 trillion (down from $3.633 trillion) of the $7.325 trillion in total money fund assets (or 49.5%) tracked by Crane Data. (Note: Our Weekly MFPH are e-mail only and aren't available on the website. See our latest Monthly Money Fund Portfolio Holdings here and our May 12 News, "May Money Fund Portfolio Holdings: FICC Repo Hits $1T, T-Bills Drop.")
Our latest Weekly MFPH Composition summary shows Government assets dominating the holdings list with Treasuries totaling $1.638 trillion (up from $1.626 trillion two weeks ago), or 45.2%; Repurchase Agreements (Repo) totaling $1.311 trillion (down from $1.341 trillion two weeks ago), or 36.2%, and Government Agency securities totaling $329.7 billion (down from $330.2 billion), or 9.1%. Commercial Paper (CP) totaled $140.7 billion (up from two weeks ago at $133.7 billion), or 3.9%. Certificates of Deposit (CDs) totaled $79.0 billion (down from $82.3 billion two weeks ago), or 2.2%. The Other category accounted for $85.3 billion or 2.4%, while VRDNs accounted for $39.2 billion, or 1.1%.
The Ten Largest Issuers in our Weekly Holdings product include: the US Treasury with $1.638 trillion (45.2% of total holdings), Fixed Income Clearing Corp with $417.5B (11.5%), the Federal Home Loan Bank with $208.8 billion (5.8%), JP Morgan with $120.8B (3.3%), Citi with $89.4B (2.5%), RBC with $86.3B (2.4%), BNP Paribas with $85.2B (2.4%), Federal Farm Credit Bank with $81.8B (2.3%), Bank of America with $54.6B (1.5%) and Barclays PLC with $45.9B (1.3%).
The Ten Largest Funds tracked in our latest Weekly include: JPMorgan US Govt MM ($287.5B), JPMorgan 100% US Treas MMkt ($247.5B), Goldman Sachs FS Govt ($247.2B), Fidelity Inv MM: Govt Port ($235.7B), BlackRock Lq FedFund ($167.2B), Morgan Stanley Inst Liq Govt ($166.3B), Fidelity Inv MM: MM Port ($154.9B), State Street Inst US Govt ($152.2B), BlackRock Lq Treas Tr ($150.6B), and Dreyfus Govt Cash Mgmt ($127.6B). (Let us know if you'd like to see our latest domestic U.S. and/or "offshore" Weekly Portfolio Holdings collection and summary.)
In other news, Barron's writes, "Morgan Stanley Says SEC Closed Cash-Sweep Investigation," which explains, "Morgan Stanley said the Securities and Exchange Commission's enforcement division closed its investigation into the company's cash sweep practices and doesn't intend to recommend an enforcement action against the firm. The wealth management firm disclosed the update in its quarterly report filed with the SEC on May 5."
The piece says, "The end of the SEC investigation, which Morgan Stanley disclosed last summer, concludes one of several legal threats to the company based on how Morgan Stanley moves brokerage clients' uninvested cash to an affiliate bank deposit program that pays little interest to clients. The quarterly filing notes that Morgan Stanley 'is responding to requests from a state securities regulator regarding brokerage account cash balances swept to the affiliate bank deposit program.' The company is also being sued by a retail investor over its cash sweep practices."
Barron's explains, "Brokerage firms have long swept clients' idle cash into sweep accounts that pay little interest. The practice garnered little attention when prevailing interest rates were near zero, but that changed in recent years as the Federal Reserve hiked its benchmark rate. With many money-market funds and online savings accounts paying 4% or more, investors have become more attuned to what they are earning on cash. Importantly, advisory accounts are held to a different and higher standard than brokerage accounts. In July 2024, Morgan Stanley raised rates on some customers' uninvested cash in advisory accounts."
They add, "Last year, customers filed lawsuits accusing brokerage firms such as Morgan Stanley, LPL Financial, and Ameriprise Financial of breach of fiduciary duty over cash sweep practices in brokerage accounts. The SEC also began investigations of some firms' practices. In January, Merrill Lynch and two units of Wells Fargo agreed to pay $60 million in combined penalties to settle SEC charges that they failed to consider the best interest of clients when designing automatic cash sweep programs that paid low interest rates to customers."
Finally, Courthouse News Service also writes about sweeps in an article titled, "Finance brokerage firm looks to dodge claims it put customers' money into low-return cash sweep." They state, "Independent broker-dealer LPL Financial argued ... that its customers can't claim the company unjustly enriched itself by automatically taking uninvested money in their accounts and depositing it into their cash sweep programs that paid little in interest because the business doesn't have a fiduciary duty to clients."
They quote Joseph Floren of Morgan Lewis & Bockius, LPL Financial's attorney, "This free-floating fiduciary duty doesn't supersede a contract. It's not reasonable to expect that LPL acted in the customer's interests." The company, he added, "was entitled to every dollar it collected."
The article adds, "In a class action filed last year, Michigander Daniel Peters said he opened simple accounts with LPL where his cash was automatically funneled into two different cash sweep programs. A cash sweep is a method used by investment firms to move uninvested cash into FDIC-insured accounts or money market funds.... LPL argues that not only were the programs voluntary, but the company disclosed that interest rates customers received would be low because of fees paid to LPL. The company says also disclosed with customers that the programs created a conflict of interest between it and customers because it relies on the fees it collects as an important stream of revenue and that without it, the company's other fees would increase."
