Another institution, JP Morgan, is in legal limbo over allegations related to its money-laundering program.
Illinois resident Dan Bodea filed a lawsuit last week in the Southern District of New York seeking a class action against JP Morgan Securities. Bodea alleges that some of the excess money in his JP Morgan account was automatically transferred or “hidden” to an interest-bearing bank account at JPMorgan Chase Bank, similar to similar policies at many other firms that have become fodder for a number of lawsuits filed recently. week.
In this latest lawsuit, Bodea argued that the firm had a fiduciary responsibility that it repeatedly breached by shorting the accounts of clients who “receive only a minimal return on their cash deposits,” as well as hiding these benefits from clients by using “the inaccurate, misleading or skewed disclosures,” the complaint states.
Bodea alleges that JP Morgan Securities designated itself as its “custodian and exclusive agent” and that JPMorgan Chase Bank was the only option when client money was deposited into interest-bearing accounts. According to Bodea, the firm was a kind of “double agent”, benefiting itself and its affiliated firms when it should have been acting in the best interests of clients.
According to Bodea, the only disclosures about what the bank earned from customers' stolen money were references to the difference between what the bank earned and paid out. But, he argues, he and other clients were not informed of the “interest rate and other income earned” by the bank and JP Morgan Securities.
Those transactions kept interest rates “unreasonably” low for customers in the program, according to Bodea.
“While (JPMorgan Chase Bank), acting as a bank against (JP Morgan Securities) clients' cash in the Program, is not a fiduciary of those clients and may impose any 'spread' it may negotiate on the side of the transactions long with its depositors, (JP Morgan Securities) is a fiduciary of these clients and in that capacity was required to put the interests of their clients – not of (JPMorgan Chase Bank) – first when negotiating and entering into transactions with (JPMorgan Chase Bank) in connection with the Program,” the complaint said.
JP Morgan is the latest in several firms to face class-action lawsuits related to money laundering, including complaints filed against UBS, LPL and Ameriprise just last week.
Attorneys with Philadelphia-based “class action law firm” Berger Montague are representing Bodea, and they are also representing clients in several other money laundering-related cases (including previous lawsuits against LPL, Wells Fargo AND Ameriprise).
The firm announced late last week that it was hiring attorney Alex Heller to help increase the number of money laundering cases (Heller is named as one of the lawyers representing Bodea).
last month, Morgan Stanley revealed it was facing SEC investigations into its money laundering programs. Wells Fargo's most recent quarterly filings showed it was in “settlement discussions” with the commission about an investigation the firm first disclosed late last year.
Moody's has warned companies and other firms that ongoing investigations into money laundering programs could negatively impact their credit ratings by reducing revenue from uninvested customer money and increasing legal and regulatory costs.
In recent quarterly earnings reports and calls, UBS, Wells Fargo, BofA and Morgan Stanley said they were reevaluating their sweepstakes deposit programs.