JPMorgan Chase has been hit with a proposed class action lawsuit in New York federal court, alleging that its securities branch “shortchanged” customers by automatically redirecting their uninvested cash balances into deposit accounts at its affiliate, Chase Bank.
Plaintiff Claims Misuse of Bank Deposit Sweep Program
Dan Bodea, the plaintiff, filed a complaint on Friday accusing JPMorgan Securities of leveraging its “Bank Deposit Sweep Program” to provide excessive benefits to itself and its affiliates. According to the suit, JPMorgan Securities, acting as an agent and fiduciary for its customers, used the program to automatically deposit uninvested cash into accounts at Chase Bank, supposedly to offer an interest-bearing, FDIC-insured option for holding cash.
The complaint argues that JPMorgan Securities, as per the program agreements, is obligated to act in its customers’ best interests, including negotiating interest rates and selecting accounts. However, Bodea claims the bank’s actions breached these fiduciary duties, benefiting itself rather than its customers.
JPMorgan Chase sweeping customers Suit : Allegations of Conflict and Concealment
Bodea alleges that JPMorgan Securities exploited the bank deposit sweep program to take compensation from customers’ cash and misled them about the benefits received. The complaint accuses the bank of failing to disclose its dual role as both a customer and an affiliate’s agent, resulting in a conflict of interest.
