Merrill Lynch customers whose uninvested cash was swept into Bank of America deposit accounts from 2022 onward may be covered by a proposed class action alleging Merrill Lynch paid unreasonably low interest, as little as 0.01%, while market rates climbed. A federal judge allowed key claims against Merrill to proceed on September 30, 2026, but no class has been certified and there is nothing to file yet.
Allegations Only · No Settlement Yet
This article describes a class action complaint. The statements below are unproven allegations. Merrill Lynch has not been found liable, there is no certified class, and nothing to claim at this time. This page is informational and is not legal advice.
What Is This About?
On September 30, 2026, U.S. District Judge Margaret M. Garnett ruled on the defendants’ motion to dismiss In re Merrill Lynch Cash Sweep Programs, No. 1:23-cv-10768, in the U.S. District Court for the Southern District of New York. The motion was granted in part and denied in part: the case will continue against Merrill Lynch, Pierce, Fenner & Smith Inc., but Bank of America Corporation, Bank of America, N.A. and Managed Account Advisors LLC are out.The plaintiffs allege that Merrill automatically swept customers’ uninvested cash into deposit accounts at Bank of America affiliates and paid interest that did not keep pace with market rates, to the benefit of the bank. According to the complaint, from January 2022 through April 2025, Merrill paid 0.01% to customers in its lowest two asset tiers, up to 0.30% in the third tier and up to 1.06% in the top tier, and a flat 0.01% in its Direct Deposit Program, while the federal funds rate rose above 5%. Merrill has not been found liable, and the ruling on the motion to dismiss assumes the complaint’s facts are true only for the purpose of deciding whether the claims can go forward.
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Who Is Affected?
The consolidated complaint is brought on behalf of a proposed class of Merrill customers whose cash was swept under three programs: the Merrill Lynch Bank Deposit Program and Direct Deposit Program for non-retirement accounts, and the Retirement Asset Savings Program for retirement accounts. It includes self-directed Merrill Edge customers and customers with advised Merrill Lynch Wealth Management accounts. The named plaintiffs held Cash Management Accounts, traditional IRAs and Roth IRAs.Merrill argued that the plaintiffs could not pursue claims over employer-sponsored retirement accounts because none of them held one. Judge Garnett declined to dismiss on that basis for now, reasoning that those accounts are swept under the same Retirement Asset Savings Program, but said she may revisit the issue later, including at class certification. She also refused Merrill’s request to strike the complaint’s comparisons to money market funds, Treasury bills and other benchmarks.
The case grew out of a lawsuit Margaret McCrary filed on December 11, 2023 on behalf of Merrill Edge retirement account holders from March 17, 2022 onward, the point when the Federal Reserve began raising rates. In April 2025, Judge Garnett consolidated it with four similar suits, including cases naming Bank of America as a defendant, under the current caption.
This case is separate from the $39 million Merrill Lynch cash sweep settlement in Valelly v. Merrill Lynch, which covers Merrill Edge retirement accounts in an earlier period, from about December 2016 to March 2020, and is awaiting court approval.
Which Claims Survived?
Judge Garnett allowed these claims to proceed against Merrill:- Breach of contract, for all proposed class members and separately for the retirement subclass. The judge found the plaintiffs plausibly alleged at least an implied duty to pay reasonable interest on retirement sweep accounts and a duty to set rates “based on economic and business conditions,” as Merrill’s agreements stated. Theories based on agency, ERISA and the tax code did not survive.
- Breach of the implied covenant of good faith and fair dealing, for all proposed class members and the retirement subclass.
- Breach of fiduciary duty, but only for customers with advised accounts.
- Negligent misrepresentation and omissions.
- Violation of New York General Business Law Section 349, the state’s deceptive practices law, based on alleged misleading statements about how sweep rates were set and the removal of “reasonable” rate language from some agreements.
What Happens Next?
The case now moves forward against Merrill alone. As of October 3, 2026, the docket shows no schedule for discovery, class certification or trial. Merrill will have the chance to contest the allegations, and the plaintiffs would have to win class certification before anyone outside the named plaintiffs could recover. There is nothing for customers to file.Questions
Is this the same as the $39 million Merrill Lynch cash sweep settlement?
No. The $39 million settlement resolves Valelly v. Merrill Lynch, an older case before Judge Valerie Caproni covering Merrill Edge retirement accounts from about December 2016 to March 2020. This lawsuit, In re Merrill Lynch Cash Sweep Programs, is a separate case before Judge Margaret Garnett that focuses on the period after interest rates began rising in March 2022. It has not settled.
What did the judge decide on September 30, 2026?
Judge Garnett granted the defendants' motion to dismiss in part. Bank of America Corporation, Bank of America, N.A. and Managed Account Advisors LLC were dismissed from the case, along with the negligence and unjust enrichment counts and the fiduciary duty count as to self-directed customers. Claims for breach of contract, breach of the implied covenant of good faith and fair dealing, breach of fiduciary duty for advised customers, negligent misrepresentation and violation of New York General Business Law Section 349 will proceed against Merrill Lynch. The ruling does not decide whether the allegations are true.
Which Merrill accounts are involved?
The consolidated complaint covers cash swept from Merrill accounts into deposit accounts at Bank of America affiliates under three programs: the Bank Deposit Program and the Direct Deposit Program for non-retirement accounts, and the Retirement Asset Savings Program for retirement accounts such as traditional and Roth IRAs. The named plaintiffs held Cash Management Accounts, traditional IRAs and Roth IRAs, and the complaint includes both self-directed Merrill Edge customers and advised Merrill Lynch Wealth Management customers.
Can Merrill customers file a claim in this lawsuit?
No. The case is at an early stage. No class has been certified, there is no settlement, and there is nothing to file. The court has not set a schedule for discovery, class certification or trial.
Sources and Verification
- In re Merrill Lynch Cash Sweep Programs, No. 1:23-cv-10768 (S.D.N.Y.) — CourtListener docket
- Opinion & Order on the motion to dismiss (ECF 104, September 30, 2026)
- Original complaint, McCrary v. Merrill Lynch, Pierce, Fenner & Smith Inc. (ECF 1, December 11, 2023), embedded below
