Bank of America to pay $39 million to settle customer claims over low interest rates on cash
BAC•Bank of America’s Merrill Lynch unit agreed to pay $39 million to settle claims that it paid brokerage customers near-zero interest on idle retirement-account cash. The settlement requires approval by a federal judge.
1. Settlement filed
Merrill Lynch will pay $39 million to settle a class action over interest rates on customers’ idle cash in retirement accounts. Settlement papers were filed in Manhattan federal court, and the agreement requires approval by U.S. District Judge Valerie Caproni; it would avert a trial scheduled for mid-October.
2. Customer allegations
Holders of Merrill Edge online accounts from December 15, 2016, to March 15, 2020, alleged that Merrill Lynch breached client agreements by sweeping cash into deposit accounts paying less than a “reasonable rate” of interest. The complaint said those accounts yielded 0.05% to 0.14% annually, while other brokerages paid about 2%. Merrill Lynch denied wrongdoing in agreeing to settle.
3. Other sweep cases
Many banks and brokerages have faced lawsuits over low-yielding sweep accounts, particularly in 2023 and 2024, with mixed results. In February, a Manhattan federal judge said part of a similar lawsuit against JPMorgan Chase could proceed. On September 18, another judge approved a $70 million settlement with Oppenheimer & Co.
