Merrill Lynch Settles Low Interest Rate Lawsuit for $39 Million

Merrill Lynch, a brokerage unit of Bank of America, agreed to pay $39 million to settle a class action lawsuit alleging the firm paid customers near-zero interest rates on idle cash in retirement accounts. The settlement, filed Wednesday in Manhattan federal court, covers holders of Merrill Edge online accounts between December 15, 2016, and March 15, 2020.

Plaintiffs claimed the firm breached client agreements by sweeping cash into accounts yielding between 0.05% and 0.14%, while competitors offered rates around 2%. The agreement avoids a trial that had been scheduled for mid-October, though the firm denied any wrongdoing as part of the settlement.

The case awaits final approval from US District Judge Valerie Caproni. This litigation follows a broader trend of legal actions against large financial institutions over low-yielding sweep accounts during periods of rising interest rates.