Judge Declines To Certify Wells Fargo Cash Sweep Class—For Now
By CU Today Staff —
SAN FRANCISCO--A California federal judge has declined to certify a proposed nationwide class of Wells Fargo customers who allege the bank underpaid interest on cash sweep accounts, ruling that individualized questions over each customer's state statute of limitations prevent certification at this stage, according to Law360.
The proposed class action alleges Wells Fargo steered customers' uninvested cash into affiliated low-interest sweep accounts while retaining a greater financial benefit for itself. During an April hearing, U.S. District Judge Vince Chhabria had signaled concerns that differences in state laws governing statutes of limitations and other individualized issues could complicate certification of a nationwide class, even while acknowledging the case presented significant common questions, the Daily Journal reported.
The latest ruling leaves the underlying claims intact but requires further analysis before any class can be certified. Plaintiffs contend Wells Fargo breached contractual and fiduciary obligations by paying unreasonably low interest rates on swept cash balances, while the bank has argued customers were fully informed about how the sweep program operated and that individual issues outweigh common ones.
The litigation is one of several recent challenges involving cash sweep programs. In January 2025, the U.S. Securities and Exchange Commission fined two Wells Fargo advisory firms and another brokerage a combined $60 million, alleging compliance failures related to advisory cash sweep programs during periods of rising interest rates. The firms settled the matter without admitting or denying the SEC's findings.
Originally reported by CU Today.