Bernstein Litowitz Berger & Grossmann and Former SEC Commissioner Robert J. Jackson, Jr. Launch Cash Sweep Task Force to Fight for Brokerage Customers Who Lost Massive Income in Low-Interest Cash Sweep Accounts

Following SEC’s announced investigations into major banks and brokerages – including Wells Fargo and Morgan Stanley – BLB&G is partnering with former SEC Commissioner Robert J. Jackson, Jr. in investigating misconduct; firm to host webinar Monday, Aug. 26 for those seeking redress

NEW YORK–(BUSINESS WIRE)–Amid recent disclosures of artificially low interest rates paid by cash sweep programs at major banks, brokerages and financial institutions, Bernstein Litowitz Berger & Grossmann LLP (BLB&G) has launched a new Cash Sweep Task Force to work on behalf of brokerage customers who have been underpaid what is estimated to be billions of dollars in interest.

The firm is currently investigating Wells Fargo, Ameriprise, LPL, and E*trade, among others, whose retail clients’ cash balances were kept in accounts at heavily depressed interest rates, allowing the institutions to reap significant profits at their clients’ expense.

“Major banks and brokerages have shortchanged their retail customers by failing to pay fair prevailing interest rates on certain cash accounts,” said former SEC Commissioner Robert J. Jackson, Jr. “Our nation’s largest financial institutions should not be profiting at the expense of their own customers—essentially picking customers’ pockets in order to line their own. The SEC is doing its part to expose and put a stop to this activity, but retail customers need to take action to recover the monies they are owed.”

Professor Jackson was nominated by President Trump, and unanimously confirmed by the Senate, to be SEC Commissioner in 2017, where he served until 2020. As Commissioner, he was an outspoken advocate for protecting investors, consistently calling for more transparency in capital markets and championing evidence-driven policymaking. Professor Jackson is currently the Nathalie P. Urry Professor of Law at NYU School of Law. He will be joined on the Task Force by Edwin Hu, a Professor at the University of Virginia School of Law who previously served as an Advisor to the White House’s National Economic Council and Chief Economist to Commissioner Jackson at the SEC.

Professors Jackson and Hu will join a webinar hosted by BLB&G on Monday, Aug. 26, at 4:30 pm ET, for customers who may have been impacted by having their uninvested cash swept into accounts paying artificially low interest. The firm is partnering with Professor Jackson in pursuing civil cases against banks and other institutions regarding their cash-sweep account practices. Those interested in joining the webinar can register: https://events.teams.microsoft.com/event/cc0a52d4-06f7-45f0-bdba-39eae3ad795d@b34b5583-2314-42aa-a966-29742b7343f9.

Sweeps are operated by banks and brokerages to move client cash into money-market or other higher-yield accounts in order to maximize its growth. In reality, institutions have largely aggregated customer cash into accounts paying a small fraction of yields otherwise available in today’s high interest-rate environment.

“Companies that took advantage of the recent rise in interest rates to enrich themselves at the expense of their own customers – in disregard of their fiduciary and contractual obligations – face serious liability for such misconduct,” added BLB&G Partner Adam Wierzbowski. “Our Cash Sweep Task Force has been formed to ensure that the rights of investors large and small are fully protected.”

The task force is ideally positioned to handle the full spectrum of litigation matters arising from the failure of investment firms, brokerages and banks to pay fair interest rates on the cash accounts of both retail investors and institutions. BLB&G’s Cash Sweep Task Force includes Partners Jerry Silk, Avi Josefson, Adam Wierzbowski and Scott Foglietta, and Associates Emily Tu and Nicole Santoro.

BLB&G recently recovered more than $2 billion for investors from a series of funds managed by Allianz Asset Management—among a number of cases in which BLB&G helped clients recoup funds from investment management firms that breached fiduciary and contractual duties to customers. Previously, BLB&G recovered millions of dollars from financial institutions such as State Street and Northern Trust for similar violations of their obligations to customers. Overall, BLB&G is responsible for over $40 billion in aggregate recoveries on behalf of defrauded investors and consumers.

BLB&G has developed extensive relationships with recognized experts in banking and investment management who are prepared to work with the firm to vindicate the rights of the many victims of cash-sweep misconduct.

A series of recent securities fraud litigation successes – including a $1 billion recovery from Wells Fargo – earned BLB&G a ranking as the top securities litigation firm for plaintiffs in North America by the Securities Class Action Services (SCAS) division of Institutional Investor Services. This prestigious recognition follows the firm’s 14th consecutive #1 ranking in SCAS’s “Top 100 U.S. Class Action Settlements of All Time” report, published in January 2024. The report notes that BLB&G has served as lead or co-lead counsel in 38 of the top 100 U.S. securities fraud settlements—almost twice as many as the firm’s competitor.

The Benchmark Litigation guide called BLB&G “one of the most successful plaintiffs’ firms in the country,” ranking it a Tier 1 firm. Nine BLB&G Partners are included among the “500 Leading Lawyers in America” by Lawdragon legal media.

BLB&G has offices in New York, California, Illinois and Louisiana, and is active in major litigation in federal and state courts throughout the United States.

Contacts

Adam Wierzbowski

Bernstein Litowitz Berger & Grossmann LLP

1251 Avenue of the Americas

New York, NY 10020

Tel: 212-554-1400

[email protected]