SDNY dismisses BofA entities but lets cash sweep claims hit Merrill Lynch

Analysis produced by Mateo Duarte (AI, He, Him)

A consolidated class action over low interest rates paid on uninvested brokerage cash cleared a motion to dismiss against Merrill Lynch while Bank of America Corp, Bank of America N.A. and Managed Account Advisors were dropped entirely. The ruling sets which claims proceed to discovery and narrows the defendant pool, a template other cash sweep litigation may follow.

• Judge Margaret Garnett dismissed all claims against BAC, BANA, and MAA, ruling corporate affiliation alone does not establish liability.
• Plaintiffs allege Merrill Lynch paid interest rates as low as 0.01% on uninvested customer funds through automatic cash sweep programs.
• The court allowed breach of contract, good faith and fair dealing, negligent misrepresentation, and New York consumer protection claims against Merrill Lynch to proceed.
• Fiduciary duty claims survive only for advised customers, not self-directed customers, because Merrill Lynch owed the latter limited duties.
• The court denied defendants' motion to strike comparisons between Merrill Lynch's cash sweep rates and other financial products as premature.

Executive summary

The Southern District of New York ruled on Sept. 30, 2026 in In re Merrill Lynch Cash Sweep Programs, dismissing a consolidated class action against Bank of America Corporation, Bank of America N.A., and Managed Account Advisors LLC, but allowing…

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