Mass. Regulator inquires if Merrill Lynch, LPL Financial, and others are raising rates.
According to numerous reports, Massachusetts Secretary of the Commonwealth William Galvin is investigating whether TD Ameritrade, Merrill Lynch, LPL Financial, Ameriprise, Securities America and SoFi are harming their customers by refusing to raise interest rates paid in customers’ sweep accounts after the recent rate increase by the Federal Reserve.
Galvin says in a statement that his office has sent letters to the five firms asking them whether they intend to raise the rates on their sweep accounts following Wednesday’s 0.25% rate increase by the Fed.
“Consumers are being hit with the double-whammy of higher credit card and loan rates on one end and low rates of interest on their bank accounts and other investments,” according to Galvin in a statement. “It’s simply unfair that consumers are being asked to pay more on credit cards and loans, while the banks are pocketing the interest rate hikes that should be earned on custodial money instead of raising interest rates for people who are trying to keep their savings.”
The SEC has also been investigating sweep accounts as of late, which are basically accounts used by firms to hold cash for customers.
O.N. Investment Management settled with the SEC in January over allegations of disclosure failures about revenue sharing in cash sweep products, see more here.
We also reported in March that the SEC charged Cambridge Investment Research Advisors in connection with alleged disclosure failures about revenue-sharing arrangements involving money market sweep funds and certain mutual funds.
This information is publicly available and provided to you by The White Law Group.
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Tags: Ameriprise, cash sweep accounts, FED raises rates, Interest rates cash sweep accounts, LPL Financial, Massachusetts Secretary of the Commonwealth William Galvin, Merrill Lynch cash sweep account, Securities America, SoFi cash sweep accounts, TD Ameritrade Last modified: December 6, 2022