Wells Fargo, Morgan Stanley and Bank of America are among a group of Wall Street banks accused of charging their customers billions of dollars in interest payments, a new report shows.
The U.S. Securities and Exchange Commission is investigating the banks to determine whether they deliberately steered their customers into “cash sweep” accounts that paid little to no interest, the Financial Times reports.
Cash sweep accounts are designed to turn unused money into investment vehicles that earn interest, and all three banks are already facing proposed class action lawsuits claiming they prioritized their own profits by putting customers’ money into options with a low interest rate without proper disclosure.
The revelations stem from new quarterly filings with the SEC.
In these documents, Wells Fargo says it is in “resolution discussions” with the agency over the issue, Morgan Stanley says the agency began asking questions about it in April, and Bank of America confirms it is currently under scrutiny.
All three banks declined to comment on the case.
Other financial companies involved in lawsuits related to cash sweep accounts include LPL Financial and Ameriprise.
LPL Financial says it plans to “vigorously” defend itself against the allegations, while Ameriprise has not released a public statement on the matter.
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