A U.S. District Judge in Manhattan ruled that JPMorgan Chase must face a significant portion of a proposed class-action lawsuit regarding its Cash Sweep programs. The lawsuit alleges the bank paid customers near-zero interest rates on uninvested cash in brokerage and retirement accounts.
The bank automatically enrolled clients in programs paying rates as low as 0.01%. During this period, short-term government bill rates exceeded 5%. Plaintiffs allege this practice siphoned billions of dollars in potential income from customers.
The ruling requires JPMorgan to address claims that it breached deposit account agreements by failing to adjust rates based on economic conditions. The judge dismissed separate claims alleging the bank breached its fiduciary duties.
The proposed class action includes customers dating back to August 2018. JPMorgan Chase has declined to comment on the ruling.