February 3, 2021

Court Sustains Wolf Popper LLP’s Complaint Against Merrill Lynch in “Sweep” Account Class Action

In a January 25, 2021 Opinion and Order, Judge Valerie Caproni of the United States District Court for the Southern District of New York granted the motion of plaintiff Sarah Valelly, represented by Wolf Popper, for permission to file an amended class action complaint against Merrill Lynch, Pierce, Fenner & Smith Inc.  The amended complaint asserts that Merrill was contractually obligated to pay a “reasonable rate” of interest on uninvested cash in Merrill Edge retirement accounts and, in breach of that agreement, swept plaintiff’s uninvested cash into low-yielding money market deposit accounts maintained by Merrill’s indirect parent, Bank of America, N.A.  In her order, Judge Caproni observed that plaintiff’s proposed complaint sufficiently demonstrated that the rate Merrill paid on retirement sweep accounts “was significantly lower than the average rates paid by FDIC-insured banks on deposit accounts across the United States.”

The Court also granted plaintiff permission to amend her complaint to allege that Merrill failed to pay her the higher rate of interest available on “linked” accounts.  The Court observed that plaintiff “opened all three accounts under the same username and password,” that “Defendant’s website listed all three accounts together and displayed the aggregate balance of the accounts” and that “Plaintiff alleges that when she clicked on a hyperlink on Defendant’s website that said ‘Link your internal accounts…’ the website indicated that her three accounts were already linked.”  Judge Caproni concluded that these pled facts raised the inference that Merrill had breached the covenant of good faith and fair dealing. 

The case is Sarah Valelly v. Merrill Lynch, Pierce, Fenner & Smith Inc., Case No. 1:19-cv-07998-VEC (S.D.N.Y.).

Wolf Popper LLP is a nationally recognized law firm in the fields of securities litigation, consumer fraud, ERISA, antitrust, health care litigation, and corporate transactional/derivative litigation.

For more information, please contact Robert C. Finkel at rfinkel@wolfpopper.com or Adam J. Blander at ablander@wolfpopper.com.