US Banks Face Lawsuits Over Alleged Misleading Cash Management Practices

An increasing number of US banks are being accused of deceptive practices aimed at generating substantial profits at the expense of their customers.

JPMorgan Chase is the latest to be hit with a proposed class-action lawsuit, with allegations that it improperly transferred customers’ idle funds into accounts offering negligible interest rates without sufficient disclosure. This practice reportedly allowed JPMorgan to earn significant revenue from these funds while paying customers only a minimal return.

JPMorgan joins other major banks such as Wells Fargo and Bank of America, which are also under scrutiny for similar issues involving cash sweep programs. These programs are accused of covertly moving idle investment money into low-interest accounts.

Dan Bodea, an Illinois resident, is leading the class-action suit against JPMorgan, claiming that the bank intentionally obscured the details of its cash sweep program to benefit financially at the expense of its customers.

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Recent reports indicate that the U.S. Securities and Exchange Commission is investigating Wells Fargo, Bank of America, and Morgan Stanley over these allegations. In addition to these banks, Wells Fargo, Charles Schwab, Morgan Stanley, Ameriprise, LPL Financial, UBS, and Bank of America’s Merrill Lynch unit are embroiled in various legal disputes related to cash sweep practices.

While JPMorgan and other banks have largely refrained from commenting on the allegations, LPL Financial has denied the claims and pledged to vigorously defend itself in court.

Alexander Stefanov