JPMorgan Chase has been hit with a proposed class action lawsuit alleging that the bank has been funneling customers’ idle cash into accounts offering “unreasonably” low interest rates. The lawsuit was filed late Friday in federal court in Manhattan.
The legal action mirrors similar suits against other major financial institutions, including Ameriprise, LPL Financial, Morgan Stanley, UBS, and Wells Fargo. The complaint, led by Illinois resident Dan Bodea, claims that JPMorgan’s cash sweep program has shortchanged customers while presenting itself as a fiduciary, resulting in “outsized benefits” for the bank.
The lawsuit seeks unspecified compensatory and punitive damages, citing breaches of fiduciary duty, gross negligence, and unjust enrichment. Bodea has not detailed JPMorgan’s specific interest rates on uninvested cash or compared them directly to those offered by competitors. However, some brokerages currently offer sweep rates exceeding 4%, while short-term U.S. Treasury bills yield more than 5%.
This lawsuit comes amid ongoing scrutiny of cash sweep practices across the financial industry. Morgan Stanley and Wells Fargo have disclosed investigations by the U.S. Securities and Exchange Commission into their own cash sweep programs, with Wells Fargo entering settlement negotiations and announcing a rate increase on sweep deposits in late Q2, potentially affecting future net interest income.
The case is filed under Bodea v JPMorgan Chase & Co et al, U.S. District Court, Southern District of New York, No. 24-06404.
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