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Valelly v. Merrill Lynch, Pierce, Fenner & Smith, Inc. - Sweep Accounts

Type: Current Cases

Case Number: 1:19-cv-07998-VEC

Class Period: January 2017 – March 2020

Defendant(s): Merrill Lynch, Pierce, Fenner & Smith, Inc.

Court: United States District Court for the Southern District of New York

Valelly v. Merrill Lynch, Pierce, Fenner & Smith, Inc. - Sweep Accounts 

Wolf Popper LLP is prosecuting a class action in the U.S. District Court for the Southern District of New York against Merrill Lynch, Pierce, Fenner & Smith, Inc.  The lawsuit alleges that Merrill breached its contract with retirement account customers requiring Merrill to to pay a “reasonable” rate of interest on cash swept to its affiliate (Bank of America, N.A.).  Rather than pay a “reasonable” rate of interest, Merrill defaulted retirement customers into low yielding “sweep accounts,” which, between 2017 and 2020, paid an approximate .14% yield on cash balances.  Merrill’s interest rates were dramatically below the federal funds rate exceeding 2.4%.   On August 7, 2019, Fidelity Investments announced that it was challenging the “conventional industry practices by automatically directing investors’ cash into higher yielding options available for brokerage and retirement accounts as well as providing product choice.”  The press release added that Fidelity’s approach “is contrary to typical industry practices of defaulting customers’ cash into a low-yielding product – often at an affiliated bank – with no other option.”
 
As of December 2023, discovery has closed, and the parties are briefing motions related to the admissibility of their respective experts’ opinions and methodologies.
 
The lawsuit, among other things, seeks damages on behalf of retirement customers resulting from Merrill’s failure to pay them a reasonable rate of interest during the class period. 
 
The case is Sarah Valelly v. Merrill Lynch, Pierce, Fenner & Smith Inc., Case No. 1:19-cv-07998-VEC (S.D.N.Y.), pending before United States District Judge Valerie E. Caproni.


Contact Instructions
Phone: Robert C. Finkel - (212) 451-9620
Phone: Adam Blander - (212) 451-9667
Email: Outreach@wolfpopper.com
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