PNC Financial Services Group and its investment subsidiaries have been the subject of a class action lawsuit alleging breach of fiduciary duty related to their retirement account cash sweep program. The complaint asserts that PNC funneled uninvested cash balances from customers’ brokerage and retirement accounts into affiliated bank accounts that paid significantly lower interest rates than comparable market options, allowing PNC to profit at clients’ expense.
PNC Retirement Account Cash Sweep Lawsuit
Background of the Lawsuit
The class action lawsuit was filed by plaintiff Ahmed M. Hegazy in December 2024 in the U.S. District Court for the Western District of Pennsylvania. It names PNC Financial Services Group, PNC Investments LLC, and National Financial Services LLC as defendants. The complaint claims that PNC breached its fiduciary duty and contractual obligations by enrolling customers into a cash sweep program that prioritized PNC Bank’s profit over customer returns.
According to the lawsuit, despite significant increases in the federal funds rate since 2022, PNC’s cash sweep program paid customers paltry interest rates—sometimes as low as 0.05%—while PNC itself earned substantial interest gains, generating billions in net interest income annually.
Main Allegations
- Breach of Fiduciary Duty: PNC allegedly failed to maximize returns for investors by channeling funds into low-yield accounts within its own bank affiliate.
- Breach of Contract: The brokerage agreements include provisions that require PNC to negotiate fair and reasonable interest rates, which the lawsuit claims were not honored.
- Unjust Enrichment: The defendants improperly kept the spread between the low interest paid to customers and the higher returns earned by PNC, unjustly enriching themselves.
- Breach of Good Faith and Fair Dealing: PNC purportedly acted in bad faith by prioritizing its own revenues rather than customers’ best interests.
Interest Rate Comparisons
The plaintiff’s complaint highlights that during 2023 and 2024, many financial institutions offered significantly higher interest rates on similar uninvested cash accounts. Competitors such as Fidelity, Vanguard, and Robinhood paid yields exceeding 4% at times, starkly contrasting with PNC’s low returns.
Legal Proceedings and Court Actions
The court has been moving the case forward with discovery and motions addressing class certification and liability. The plaintiff seeks certification of all PNC retirement account holders who participated in the cash sweep program during the relevant period.
Remedies sought include damages exceeding $5 million, an injunction requiring PNC to pay market-competitive interest rates going forward, and reimbursement of lost interest to affected customers.
Potential Impact for Investors
Investors who held their cash in PNC’s retirement and brokerage accounts with cash sweep features during the years 2018 through the present may be impacted. If the class is certified and the lawsuit succeeds, affected clients could receive compensation for lost interest income and other damages.
What Investors Can Do
- Review account terms and statements to determine if your uninvested cash was included in PNC’s sweep program.
- Contact a qualified attorney to discuss potential eligibility for the lawsuit or settlement participation.
- Keep documentation of interest payments and related account activity for claims support.
Conclusion
The PNC retirement account cash sweep lawsuit underscores the fiduciary responsibility financial firms owe investors, especially concerning management of uninvested cash assets. It places a spotlight on transparent and fair financial practices in wealth management.
As proceedings develop, investors and financial services clients should stay informed on their rights and the evolving landscape of cash sweep programs and related litigation.
