A growing number of U.S. banks are accused of routinely misleading customers in an attempt to pocket billions of dollars.
JPMorgan Chase is now facing a proposed class action lawsuit for allegedly transferring customers’ unused 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 unused investment money into accounts with near-zero interest.
In his class action lawsuit against JPMorgan, Illinois resident Dan Bodea alleges that the bank concealed its actions and failed to adequately explain how its cash sweep program works to “generate substantial revenue for itself from the cash of their customers and a favorable return on such cash”. , while they only pay their customers a small part of that return.”
Recent filings show the U.S. Securities and Exchange Commission is investigating 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 now face several legal battles related to the cash sweep.
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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