National investment loss lawyers KlaymanToskes is investigating Morgan Stanley on behalf of investors whose cash positions were negligently placed into low-yield “sweep accounts,” despite the availability of significantly higher-yielding alternatives. Morgan Stanley allegedly defaulted client cash into its Bank Deposit Sweep Program (BDP), which paid as little as 0.01%, while profiting from the spread between those rates and prevailing market returns.
Morgan Stanley’s failure to act in the best interest of its clients allegedly resulted in billions of dollars in lost interest income for affected investors. KlaymanToskes is currently representing investors seeking to recover losses tied to low-interest-bearing accounts and negligent cash management by brokerage firms and their financial advisors.
If you had $1,000,000 or more 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 March 2022 through the present, Morgan Stanley allegedly swept client cash into internal bank sweep accounts that paid uncompetitive rates—ranging from 0.01% to 0.50%—depending on the cash balance. Meanwhile, market alternatives such as CDs and money market funds offered yields exceeding 4%. According to a 2024 federal class action lawsuit, Morgan Stanley earned over $8 billion in net interest income during 2023 by investing client sweep cash for its own benefit while offering clients only a fraction of those returns.
The lawsuit claims Morgan Stanley’s sweep practices violated Regulation Best Interest (Reg BI) and the firm’s fiduciary duties by failing to consider reasonable alternatives and by profiting at the expense of its clients. The investors allege the firm’s program was not only deceptive, but also systematically detrimental to investors seeking a reasonable yield on cash.
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.
KlaymanToskes is currently representing investors in claims related to negligent cash management practices and low-interest sweep accounts at major brokerage firms. 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 Morgan Stanley’s Bank Deposit Sweep Program (BDP) instead of higher-yielding options.
If you held in excess of $1,000,000 at Morgan Stanley 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.