Bank of America’s Merrill Lynch unit has agreed to a $39 million settlement to resolve a class‑action lawsuit that claimed the brokerage’s sweep accounts paid customers rates far below market levels. The settlement, filed in Manhattan federal court on Wednesday, now awaits approval from U.S. District Judge Valerie Caproni, effectively ending a trial that had been set for mid‑October.

What the lawsuit alleged

Customers who held Merrill Edge online accounts between December 15, 2016 and March 15, 2020 said the brokerage automatically moved idle cash into deposit accounts that yielded only 0.05 % to 0.14 % annually. Those rates, the plaintiffs argued, fell well short of a “reasonable rate” of interest, especially when competing brokerages were offering roughly 2 % on similar balances.

Bank of America’s response

While Merrill Lynch denied any wrongdoing, the decision to settle demonstrates a pragmatic approach to avoid prolonged litigation and the associated costs. A Bank of America spokesperson declined to comment further on the settlement terms.

Industry context

Low‑yielding sweep accounts have become a focal point for consumer lawsuits across the financial sector, particularly after the rapid rise in interest rates during 2023 and 2024. Several major institutions have faced similar claims. In February, a Manhattan judge allowed a portion of a lawsuit against JPMorgan Chase to proceed, and on September 18 a judge approved a $70 million settlement between Oppenheimer & Co. and its customers.

Why the settlement matters

By resolving the case without a trial, Bank of America avoids the uncertainty and expense of a courtroom battle while providing restitution to affected investors. The settlement also signals that large banks are taking consumer concerns about cash‑sweep practices seriously, a trend that aligns with broader efforts to ensure fair treatment of retirement savers.

Looking ahead

Financial regulators and consumer‑advocacy groups continue to monitor sweep‑account practices, urging firms to offer rates that reflect prevailing market conditions. As interest rates stabilize, customers can expect clearer disclosures and more competitive offerings from brokerage firms seeking to retain and attract investors.

For now, the $39 million settlement offers a concrete resolution for the class of Merrill Edge customers and underscores the importance of transparent, market‑aligned interest policies in the brokerage industry.

Original reporting: Appleton, WI News Feed (HLL/CB) — read the source article.