JPMorgan Chase and its subsidiary J.P. Morgan Securities face a proposed class-action lawsuit over interest payments on clients’ uninvested cash.
The complaint, filed by Illinois resident Dan Bodea, claims that J.P. Morgan Securities regularly swept clients’ uninvested cash into accounts at JPMorgan Chase that offered "unreasonably low" interest rates, allowing the company to benefit from inexpensive access to those funds.
JPMorgan has chosen not to comment on the lawsuit.
This case adds to a growing list of class actions targeting brokerage firms for their cash-sweep programs. Previously, similar actions have been filed against Ameriprise, LPL Financial, Morgan Stanley, UBS, and Wells Fargo.
Regulators, including the Securities and Exchange Commission (SEC), have also taken notice. Both Morgan Stanley and Wells Fargo have acknowledged responding to SEC inquiries regarding their cash-sweep practices.
The complaint against JPMorgan asserts that the firm misled clients about the nature of its cash-sweep program, alleging that the company used it to “generate substantial revenue from client funds while offering only a minimal share of those earnings to the clients.”
The plaintiff argues that JPMorgan's practices constitute a breach of fiduciary duty, breach of contract, and unjust enrichment, among other allegations.
The lawsuit seeks damages, interest, and a court order to halt JPMorgan's current practices.
