National investment loss lawyers KlaymanToskes is investigating Merrill Lynch on behalf of investors whose cash positions were negligently placed into low-yield “sweep accounts”, despite the availability of significantly higher-yielding alternatives. Merrill allegedly defaulted client cash into its Bank Deposit Program, which paid as little as 0.15%, instead of allocating funds to more suitable options.
Merrill’s failure to act in the best interest of its clients allegedly resulted in millions of dollars in lost interest income for affected investors. KlaymanToskes is currently representing investors seeking to pursue recovery of their lost interest income.
If you had $1,000,000 placed into low-interest bearing sweep accounts, contact securities attorney Steven D. Toskes to discuss your potential recovery options at (888) 997-9956 or investigations@klaymantoskes.com for a free and confidential consultation. We do not collect attorney’s fees unless we are able to obtain a financial recovery for you.
From at least 2022 through April 2024, Merrill Lynch systematically defaulted client cash into its Bank Deposit Program, which offered interest rates as low as 0.15%. At the same time, comparable investment options, such as CDs, U.S. Treasuries, or Merrill’s own Preferred Deposit Program, were offering yields as high as 5%.
Merrill allegedly violated its own customer agreement by failing to pay a “reasonable rate of interest” on sweep balances. These accounts often paid only 0.01% to 1.06%, while similar offerings at other firms paid 2.72% to 4.15% during the same period.
This misconduct is the subject of an ongoing federal class action lawsuit, which alleges that Merrill’s practices breached contractual obligations to advisory clients by sweeping their cash into low-yield accounts rather than seeking reasonable returns. In September 2024, the Court upheld the plaintiff’s expert opinion that Merrill’s sweep rates were unreasonable and caused financial harm to the class.
Investors should know that class-actions may take many years to resolve, and that payouts are generally heavily undervalued. KlaymanToskes previously conducted a detailed study of securities arbitration versus class action and concluded that Financial Industry Regulatory Authority (FINRA) arbitration claims traditionally obtain an overall higher rate of recovery as opposed to participating and waiting for any recovery in a class action lawsuit.
In June 2024, the U.S. Securities and Exchange Commission (SEC) fined Merrill Lynch $25,000,000 for failing to adopt policies and procedures that considered clients’ best interests when selecting cash sweep options. The SEC found that Merrill profited by steering client cash into lower-yielding programs, violating the Advisers Act in the process. The SEC noted that while Merrill eventually raised rates and enhanced its supervisory processes, those changes came only after the firm had already exposed clients to years of reduced returns.
KlaymanToskes is currently representing investors in claims against Merrill Lynch for its failure to manage client cash positions in a prudent and fiduciary manner. Investors—especially retirees and high-net-worth individuals—may have suffered significant lost interest income as a result of being placed in low-yield programs like Merrill’s Bank Deposit Program instead of higher-yielding options.
If you held $1,000,000 or more at Merrill Lynch and received below-market interest rates in sweep accounts, you are entitled to pursue a financial recovery through FINRA arbitration as opposed to participating and waiting for any recovery in a class action lawsuit. Contact securities attorney Steven D. Toskes at (888) 997-9956 or email investigations@klaymantoskes.com for a free and confidential consultation to discuss your recovery options.