Latest news with #SimmonsHanlyConroy
Yahoo
11-07-2025
- Business
- Yahoo
Where Are Cash Sweep Lawsuits Now?
Retail investors are largely still waiting to cash in on class-action lawsuits over cash sweeps. Wells Fargo and LPL narrowly escaped allegations they breached fiduciary duties in separate lawsuits over cash sweeps in recent weeks. A federal court in California dismissed claims of breach of contract, breach of fiduciary duty for non-advisory clients and unjust enrichment in the Wells case last month, although others allegations remain. Legal claims are also forging ahead against a laundry list of other brokerages, including Raymond James, Charles Schwab, Ameriprise and others, according to the law firm Simmons Hanly Conroy. The litigation is forcing the big brokerages to rethink how they position — and monetize — clients' cash. 'Increasingly, RIAs have been using these brokered cash sweep products without understanding their inherent risks and conflicts,' said Gary Zimmerman, founder of the cash management platform Max, adding that brokerages often offer 'dramatically worse' rates than comparable options. 'Perhaps equally important, these conflicts of interest erode client trust,' he told Advisor Upside. READ ALSO: Advisors Calm Clients After Trump's Latest Tariff Announcements and Osaic Touts Advisor Addition Amid Commonwealth Talent Rush Cash sweeps programs, known in earnings reports as 'net interest income,' have been around for decades, but a rash of high-profile lawsuits and investigations over the practice took the industry by storm last year. The Securities and Exchange Commission closed an investigation into Morgan Stanley's program in May, without levying any enforcement actions, according to Reuters. Revenues in those accounts grew exponentially to over $8 billion in 2023 alone, according to an unrelated suit. Wirehouse frenemies Merrill Lynch and two Wells Fargo advisory firms weren't quite as lucky, with the SEC levying fines in January: Wells Fargo Clearing Services agreed to pay a civil penalty of $28 million. Wells Fargo's FiNet paid a civil penalty of $7 million. Merrill Lynch agreed to pay a civil penalty of $25 million. Under the Rug. The cash sweep programs automatically move clients' uninvested cash into an interest-bearing account, or a money market fund, unless clients know about them and choose to opt out. One study found the sweeps cost investors upward of $500 million over a six-year period, and a separate report found firms can earn profits 10 times what they pay to customers. While a certain amount of cash should be kept in brokerage accounts to help pay for fees and trading, research shows that clients typically hold the cash outside of the portfolio in bank accounts, Zimmerman said. 'That's smart, since holding cash directly in your own bank accounts is fundamentally safer than using a brokered cash sweep program,' he said. This post first appeared on The Daily Upside. To receive financial advisor news, market insights, and practice management essentials, subscribe to our free Advisor Upside newsletter.
Reuters
19-03-2025
- Business
- Reuters
US asbestos law firm defeats racketeering lawsuit by PVC pipe maker JM Eagle
March 19 (Reuters) - A federal judge in Chicago has dismissed a lawsuit by plastic pipe maker JM Eagle against a U.S. law firm that filed hundreds of asbestos personal injury cases against it. JM Eagle failed to show that law firm Simmons Hanly Conroy and the asbestos plaintiffs, witnesses and other groups the firm works with were operating as an enterprise under the Racketeer Influenced and Corrupt Organizations Act, U.S. District Judge Robert Gettleman said, opens new tab in his Tuesday ruling. With the two federal RICO counts dismissed, Gettleman said he was also dismissing JM Eagle's remaining state law claims against the law firm. JM Eagle and its attorneys at Steptoe LLP did not immediately respond to requests for comment. Simmons Hanly in a statement praised the decision for dismissing what it called a "baseless and retaliatory" lawsuit. The firm said it would "not be intimidated by unwarranted legal attacks designed to smear its reputation and derail its pursuit of justice for victims of asbestos exposure." JM Eagle, which calls itself the world's largest plastic and PVC pipe manufacturer, was previously known as J-M Manufacturing. The company said it sold "a limited amount" of cement pipes that contained asbestos from 1983 to 1988. JM Eagle had accused Simmons Hanly of suppressing evidence, using perjured or falsified testimony and statements, and committing fraud in the course of recovering billions of dollars from asbestos defendants in thousands of cases. The plastic pipe maker said Simmons Hanly has filed more than 430 cases against JM Eagle since 2001, with more than 75 of them settling. The law firm's website said Tuesday it has recovered more than $10.2 billion from defendants in asbestos cases nationwide.
