If you’ve held cash in a brokerage, advisory, or retirement account any time since 2022, there’s a good chance that money didn’t just sit there — it was automatically moved, or “swept,” into a bank deposit or money market program on your behalf. Most accountholders never think twice about this. But as interest rates rose sharply starting in 2022, cash sweep programs have come under increasing scrutiny, and we are investigating whether some financial institutions may have shortchanged their clients as a result.
What Is a Cash Sweep Program?
When you sell an investment, receive a dividend, or simply hold cash you haven’t yet reinvested, most brokerage, advisory, and retirement account platforms — including IRAs — don’t just let that money sit uninvested. Instead, they automatically move — or “sweep” — the cash into an interest-bearing account, often at a bank affiliated with the institution that holds your account. In exchange, the institution typically earns a fee from the bank for directing deposits its way, and you, the accountholder, earn interest on the swept balance.
In theory, this is a convenience: your uninvested cash earns some return instead of sitting idle between investments. In practice, the rate you actually earn — and the rate the institution and its affiliated bank earn on your deposit — can diverge significantly. That gap is sometimes described as the “spread,” and it sits at the center of a growing number of investor complaints and lawsuits.
What Changed Starting in 2022
Beginning in March 2022, the Federal Reserve began the fastest interest-rate-hiking cycle in roughly four decades, pushing the federal funds rate from near zero to over 5% by mid-2023 — and rates have remained elevated well into 2025. Savings accounts, money market funds, and certificates of deposit across the industry began paying meaningfully higher yields as a result, often adjusting within weeks of a Fed rate change.
Cash sweep rates, however, appear in many cases to have lagged far behind. Public filings and disclosures from several institutions suggest that swept cash balances continued earning a small fraction of a percent throughout much of the 2022–2025 period, even as the same institutions’ underlying revenue tied to those balances grew substantially. Some institutions earned several percentage points more on client cash than they paid out — a spread that, multiplied across billions of dollars in swept deposits, can translate into significant revenue for the institution and a meaningful shortfall for accountholders.
It’s worth noting that low sweep rates are not automatically improper — many account agreements give institutions real discretion over how sweep rates are set. But that discretion is not unlimited. Depending on how an institution’s disclosures are worded, accountholders may have a reasonable basis to expect that rates would move at least somewhat in step with prevailing market conditions, particularly during a rate environment as dramatic as the one that began in 2022.
Financial Institutions Already Facing Litigation
Cash sweep interest rate practices are not a new or isolated issue, and this is not a theoretical concern. Investors have already filed lawsuits against a number of major financial institutions — including Merrill Lynch, LPL Financial, Oppenheimer, UBS, Ameriprise, and Osaic — raising claims that swept cash balances earned far less than prevailing market rates during the 2022–2025 rate environment. Several of these cases have already cleared early motions to dismiss, and at least one has reached class certification. These filings are public record and are mentioned here only to illustrate that this is an active, developing area of litigation across the financial industry — not as a comment on the merits of any particular case, and not as an allegation against any institution we may be separately investigating.
Why This Matters for You
If you held uninvested cash in a brokerage, advisory, or retirement account at any point between 2022 and 2025, the difference between a competitive interest rate and a below-market sweep rate can add up — particularly for investors who kept meaningful cash balances during that period. This may include people who were between home sales, sitting on proceeds from a business sale, holding cash while transitioning investments, or simply keeping a larger cash cushion during a volatile market — a pattern common among investors approaching or already in retirement.
What We’re Investigating
Our firm is investigating whether certain financial institutions may have failed to pay accountholders interest reasonably reflective of prevailing market conditions on swept cash balances, and whether those institutions adequately disclosed how much of the earned interest they retained for themselves. This investigation is ongoing. No lawsuit has been filed by our firm at this stage, and no court has found any institution we are investigating liable for any wrongdoing.
Think You May Be Affected?
If you held a brokerage, advisory, or retirement account with uninvested cash at any point between 2022 and 2025, you may be eligible to participate in our ongoing investigation. Submitting information does not create an attorney-client relationship, and there is no cost or obligation to have your situation reviewed.
Learn more about the investigation and submit a free, confidential case review →
Attorney Advertising. Manfred, APC is a law firm licensed to practice in California and Oregon. This post is for general informational purposes only and does not constitute legal advice. This investigation is ongoing; no lawsuit has been filed by this firm, and no court has found any institution discussed here to have engaged in wrongdoing.
Manfred, APC | Manfred P. Muecke | CA State Bar No. 222893 | OR State Bar No. 257566 | 4225 Executive Square Suite 600-6051, La Jolla, CA 92037 | (619) 550-4005 | manfredapc.com
