SEC fines Wells Fargo $35M, Merrill Lynch $25M for ‘cash sweep’ violations

Wells Fargo branch in Baltimore, MD. Photo: Diego M. Radzinschi/ALM

After warning investors in 2023 of a Securities and Exchange probe related to its cash sweep program, Wells Fargo will pay $35 million in civil penalties to settle SEC charges for failing to adopt and implement written policies and procedures reasonably designed to prevent violations and the rules relating to the firms’ handling of investment accounts “cash sweep” program.

Soon after warning investors of the probe, Wells Fargo was hit with a class action lawsuit last year, accusing the firm of underpaying interest to clients in its cash sweep program. In a cash sweep program, a brokerage firm moves a customer’s uninvested cash from a brokerage account into an interest-bearing account.