National investment loss lawyers KlaymanToskes is investigating Wells Fargo Advisors on behalf of investors whose cash positions were negligently placed into low-yield “sweep accounts”, despite the availability of significantly higher-yielding alternatives. Wells Fargo Advisors allegedly defaulted client cash into its Bank Deposit Program, which paid as little as 0.15%, instead of allocating funds to more suitable options.
Wells Fargo’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 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 2019 through May 2024, Wells Fargo Advisors allegedly routinely swept customer cash into affiliated bank accounts that paid below-market rates. In some instances, the yield spread between the bank sweep accounts and reasonable alternatives was as high as 4%. Despite ongoing interest rate increases during this period, the firm failed to update its policies to reflect a duty of care toward its advisory clients’ best interests.
Wells Fargo is also the subject of a federal class action lawsuit alleging breach of fiduciary duty, failure to provide reasonable interest on client cash, and unjust enrichment. The lawsuit claims that Wells Fargo profited by sweeping client funds into affiliated bank programs at uncompetitive rates, while pocketing the difference.
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 Wells Fargo Advisors $35 million for failing to adopt policies and procedures reasonably designed to ensure that sweep cash was managed in accordance with clients’ best interests. The SEC found that the firm’s practices violated the Investment Advisers Act of 1940, affecting advisory clients across both its full-service and independent advisor platforms.
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 Wells Fargo’s Bank Deposit Program instead of higher-yielding options.
If you held in excess of $1,000,000 at Wells Fargo Advisors 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.