In a recent lawsuit filed on Friday night in Manhattan federal court, JPMorgan Chase, the largest bank in the United States, has been accused of channeling customers' idle cash into accounts with "unreasonably" low interest rates. This class action lawsuit follows similar cases against other banks and brokerages, including Ameriprise, LPL Financial, Morgan Stanley, UBS, and Wells Fargo. JPMorgan has declined to comment on the matter.

Illinois resident, Dan Bodea, is the lead plaintiff in the lawsuit, alleging that JPMorgan has utilized its cash sweep program to shortchange customers while falsely presenting itself as their fiduciary and earning disproportionate benefits. The lawsuit seeks unspecified compensatory and punitive damages for JPMorgan's alleged breaches of fiduciary duty, gross negligence, and unjust enrichment. However, Bodea did not specify the interest rates offered by JPMorgan on uninvested cash or how these rates compare to those of other banks.

While some brokerages offer sweep rates surpassing 4%, it is worth noting that U.S. Treasury bills maturing within three months still yield over 5%. Lawyers representing Bodea have yet to respond to requests for comment on the matter. Interestingly, Morgan Stanley and Wells Fargo have recently revealed that they are under investigation by the U.S. Securities and Exchange Commission for their cash sweep practices. Wells Fargo also reported being in settlement talks regarding the issue.

Last month, Wells Fargo announced an increase in pricing on sweep deposits during the second quarter, which is expected to impact future net interest income. The case against JPMorgan Chase and other defendants has been addressed as Bodea v JPMorgan Chase & Co et al in the U.S. District Court for the Southern District of New York, with case number 24-06404.

It remains to be seen how this lawsuit will unfold and whether it will shed light on the alleged improper handling of customers' cash in account sweeps. As the legal battle commences, stakeholders will be closely monitoring the outcomes and potential repercussions for the accused institutions.