Wells Fargo, Morgan Stanley and Bank of America are among a group of Wall Street banks accused of bilking customers out of billions of dollars in interest payments, according to a new report.
The U.S. Securities and Exchange Commission is probing the banks to determine whether they purposefully directed clients toward “cash sweep” accounts that paid little to no interest, reports the Financial Times.
Cash sweep accounts are designed to shift idle cash into investment vehicles that earn interest, and all three banks are already facing proposed class action lawsuits alleging they prioritized their own profits by placing clients’ funds in low-interest options without proper disclosure.
The revelations have emerged from new Quarterly filings with the SEC.
In those filings, Wells Fargo says it’s in “resolution talks” with the agency over the issue, Morgan Stanley says the agency began asking questions about it in April and Bank of America confirms it’s currently being scrutinized.
All three banks have declined to comment on the matter.
Other financial firms involved in lawsuits related to cash sweep accounts include LPL Financial and Ameriprise.
LPL Financial says it plans to “vigorously” defend itself against the allegations, while Ameriprise has not released a public statement on the matter.
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