JPMorgan Chase Class Action Claims Customers Are ‘Shortchanged’ By Cash Sweep Program

New to ClassAction.org? Read our Newswire Disclaimer

JPMorgan Chase & Co. faces a proposed class action lawsuit that claims subsidiary J.P. Morgan Securities LLC has shortchanged customers by “sweeping” their uninvested cash balances into deposit accounts at its affiliate bank and keeping the rewards for itself.

Get the latest open class action lawsuits sent to your inbox. Sign up for ClassAction.org’s free weekly newsletter.

The 25-page lawsuit explains that for JPMorgan Chase’s “cash sweep” program, an accountholder’s uninvested cash is automatically “swept” into an interest-bearing account at Chase Bank. Despite J.P. Morgan Securities’ contractual duties to put customers’ interests first, the class action suit says, the company has taken for itself and its affiliates the “vast majority” of the compensation earned from cash deposits, and paid artificially low interest rates to consumers.

The case alleges that J.P. Morgan Securities has acted as a “double agent” and negotiated “one-sided transactions” with Chase Bank that unfairly shift the customary compensation and returns from its cash sweep program to the bank, rather than passing the funds on to its own customers.

The complaint charges that, unbeknownst to clients in the cash sweep program, J.P. Morgan Securities has enabled Chase Bank to function as a “highly profitable arbitrage operation,” availing itself of the “nearly free cash funneled to it” by the company and retaining a substantial amount of the profits generated from customers’ deposits.

In addition, the filing contends that J.P. Morgan Securities’ accountholder agreements misrepresent the terms of the cash sweep program. Per the JPMorgan Chase lawsuit, customers’ contractual documents fail to disclose the interest rates offered under the program and remain “silent” regarding the benefits the company and its affiliates receive.

J.P. Morgan Securities’ misleading and incomplete disclosures prevent clients from giving informed consent with respect to the cash sweep program and any alleged conflicts of interest surrounding the defendants, the case claims.

The lawsuit looks to represent anyone who held cash positions in accounts custodied by JPMorgan Chase or J.P. Morgan Securities, whose cash was subject to the bank deposit sweep program.

Check out ClassAction.org’s lawsuit list for the latest open class action lawsuits and investigations.