In response to recent revelations about artificially low interest rates paid by cash sweep programs at major financial institutions, Bernstein Litowitz Berger & Grossmann LLP (BLB&G) has launched a new Cash Sweep Task Force. This initiative aims to advocate for brokerage customers who have potentially lost billions of dollars in interest due to underpayment.
The firm is investigating several major players, including Wells Fargo, Ameriprise, LPL, and E*Trade, whose retail clients’ cash balances were held in accounts with significantly depressed interest rates. This allowed the institutions to profit at the expense of their clients.
Former SEC Commissioner Robert J. Jackson, Jr. stated, “Major banks and brokerages have underpaid their retail customers by failing to offer fair prevailing interest rates on cash accounts. Financial institutions should not profit at their customers’ expense. While the SEC is working to uncover and address these issues, retail customers need to take action to recover the funds they are owed.”
Robert J. Jackson, Jr., who served as an SEC Commissioner from 2017 to 2020, was known for his advocacy for investor protection and transparency. He is currently the Nathalie P. Urry Professor of Law at NYU School of Law. Joining him on the Task Force is Edwin Hu, a Professor at the University of Virginia School of Law, former Advisor to the White House’s National Economic Council, and former Chief Economist to Commissioner Jackson at the SEC.
