JP Morgan Chase has been hit with a lawsuit from a customer from Illinois over alleged “unreasonably” low interest rates shortchanging him on its cash sweep programme.
Dan Bodea filed the lawsuit against the US’ largest bank last Friday to a Manhattan federal court, citing that its cash sweep programme shortchanged customers as it allegedly gained “outsized benefits’ for itself.
Reuters reported late last week that JP Morgan declined to comment and that the lawsuit did not specify the bank’s interest rates on uninvested cash. It also did not outline how it conducts its payouts compared to other US banks.
The lawsuit is similar to those that have been placed against other banks in the US, including those filed against the likes of Morgan Stanley and Wells Fargo.
Last month, LPL Financial was hit with a similar lawsuit regarding its fiduciary role when it came to its cash sweep programme filed to a California federal court.
The plaintiff accused LPL Financial of holding “managed and simple accounts” that “transformed into an aggressive and unlawful effort” to increase LPL profits at the expense of its customers.
A cash sweep programme, or sweep account, is a bank account that transfers funds that exceed a certain level into a high-interest earning investment account, which closes each business day.
This is not the only legal challenge that is facing JP Morgan currently at the moment. The US bank has also been the subject of an inquiry from the Consumer Financial Protection Bureau (CFPB) regarding translations via its Zelle network.
