BofA’s Merrill Lynch Settling Cash Sweep Suit for $39 Million
By PYMNTS
AI summary of the source article
Bank of America’s Merrill Lynch has agreed to settle a class action lawsuit for $39 million, resolving claims that it underpaid brokerage customers on idle cash. The lawsuit alleged that Merrill Edge online account holders between December 2016 and March 2020 received annual yields of just 0.05% to 0.14% via automatic cash sweeps, compared to market rates of roughly 2%. Merrill Lynch denied any wrongdoing in the agreement. The case is part of a broader wave of lawsuits and regulatory scrutiny facing major banks and brokerages regarding low-yielding sweep accounts as interest rates rose in recent years.
Why it matters
Many major banks and brokerages have faced lawsuits and regulatory actions over low-yielding sweep accounts that did not keep pace with rising interest rates.
Key facts
- Merrill Lynch agreed to pay $39 million to settle the lawsuit while denying wrongdoing.
- The lawsuit claimed Merrill Edge accounts offered yields of 0.05% to 0.14% on swept cash, while competitor brokerages paid around 2%.
- The suit covered Merrill Edge online account holders from Dec. 15, 2016, to March 15, 2020.