A federal judge in New York has allowed key portions of the JPMorgan Cash Sweep Claims to move forward, trimming others in a closely watched consumer class action accusing the banking giant’s brokerage arm of underpaying interest on customers’ idle cash.
In a mixed ruling Thursday, Senior U.S. District Judge Lorna G. Schofield pared back the consolidated lawsuit but declined to dismiss it entirely, preserving several contract-based allegations against J.P. Morgan Securities LLC while dismissing all claims against parent company JPMorgan Chase & Co..
The decision leaves standing claims that the brokerage firm breached certain contractual promises tied to its bank deposit sweep program — a mechanism that automatically transfers uninvested customer cash into affiliated bank accounts.
Parent Company Dismissed, Subsidiary Remains
Judge Schofield first concluded that the complaint failed to establish a contractual relationship between plaintiffs and JPMorgan Chase, referred to in the order as JPMC Holding. Without such a relationship, contract claims against the parent could not proceed.
The court also found the complaint did not sufficiently allege that the parent company could be held liable for the actions of its brokerage subsidiary.
But the ruling took a different turn when addressing claims against J.P. Morgan Securities.
