Bank of America’s Merrill Lynch to pay $39m in cash sweep case
Bank of America's Merrill Lynch unit is set to pay $39 million to settle a class action lawsuit over the rates paid on unused cash in retirement accounts. The preliminary settlement, filed in Manhattan federal court, awaits approval from US District Judge Valerie Caproni. Another similar case, ordered by US District Judge Margaret Garnett, will address claims across both retirement and non-retirement accounts.
These lawsuits have surged in recent years as interest rates have climbed. Merrill Lynch claims no wrongdoing, but the firm agreed in January to pay $25 million to settle cash sweep cases brought by the US Securities and Exchange Commission, also without admitting guilt. In the Garnett case, customers can attempt to prove Merrill Lynch breached its contractual obligations by offering an inadequate return reflecting market conditions.
The bank urged Garnett to narrow the case, noting it removed a "reasonable rate" provision from customer agreements in 2023 and 2024.
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