Home / Business and Economy / Merrill Lynch Pays $39M Over Idle Cash Interest Rates
Merrill Lynch Pays $39M Over Idle Cash Interest Rates
1 Oct
Summary
- Merrill Lynch unit settled a class action lawsuit for $39 million.
- Customers claimed near-zero interest on idle retirement account cash.
- Settlement averted a trial scheduled for mid-October.
Bank of America's Merrill Lynch unit has agreed to a $39 million settlement, resolving a class action lawsuit. The suit alleged that brokerage customers were paid minimal interest on idle cash held within their retirement accounts. These claims stated that balances were swept into deposit accounts yielding only 0.05% to 0.14% annually.
Customers argued this rate was significantly below market standards, with other firms offering approximately 2% during the same period. The settlement papers were filed late on Wednesday in Manhattan federal court, requiring approval from US District Judge Valerie Caproni.
This agreement prevents a trial that had been scheduled to commence in mid-October. Merrill Lynch denied any wrongdoing as part of the settlement. Numerous financial institutions have faced similar lawsuits regarding low-yielding sweep accounts, particularly as interest rates rose in recent years.
