If your money was held in a Merrill Lynch account between 2016 and 2020, there is news worth taking a close look at. Bank of America’s unit responsible for brokerage and wealth management agreed to pay $39 million to settle a class action accusing the firm of paying too little interest on cash that sat uninvested in retirement accounts. The settlement still requires approval by a federal judge.
The news was reported by Reuters after the settlement documents were filed with a federal court in Manhattan.
Who could receive money from Bank of America’s settlement?
The case focuses on online Merrill Edge account holders who had cash in certain accounts between December 15, 2016 and March 15, 2020.
The lawsuit contends that Merrill Lynch automatically moved idle cash into deposits known as cash sweep accounts. According to the plaintiffs, those funds earned returns that were well below what was available in the market.
The accusation does not mean that all Merrill Lynch customers will automatically receive a payout. The settlement covers a specific group of customers and is still subject to judicial approval.
How much interest did Merrill Lynch pay on the cash?
Here is the detail that explains why the lawsuit escalated into a multi-million-dollar matter.
The plaintiffs claimed that the sweep accounts paid annual yields of only 0.05% to 0.14%, whereas other brokerage firms offered around 2% during that period.
The difference may seem small when you look at a balance over a few days. But when it accumulates on large amounts of cash and over months or years, the impact changes.
The lawsuit argued that Merrill Lynch breached its agreements with clients by not paying a “reasonable” interest rate. Merrill Lynch denied wrongdoing, but agreed to settle the dispute with the $39 million agreement.
What is a cash sweep account and why does it matter?
If you have an investment account, you may have encountered this concept without paying much attention.
A cash sweep account allows idle cash that remains uninvested to be automatically moved into another vehicle, typically to earn some return while you decide what to do with that money.
The issue raised by this litigation is very concrete: what rate you received on that cash and whether it was reasonable in light of market conditions.
This type of claim is not exclusive to Merrill Lynch. Reuters notes that during 2023 and 2024 several financial institutions faced lawsuits related to sweep accounts that, according to customers, offered too-low yields while interest rates were rising. The outcomes of those cases have varied.
Can you claim part of the $39 million?
You should not assume yet that you can file a claim and receive money.
The preliminary settlement was filed in the Manhattan federal court and must be approved by Judge Valerie Caproni. The resolution avoids a trial that had been scheduled for October.
That means details about who qualifies, how the individual payment will be calculated, and when distributions would begin will depend on the judicial process.
If you think your account could fall within the stated period, keep your Merrill Edge statements and any documents showing how your cash was handled. You do not need to hand over money to anyone to “unlock” a payment.
And to be very precise here: the $39 million is the total settlement amount, not a $39 million check for each client. The amount each person may ultimately receive will depend on the distribution rules approved by the court.
