PNC Financial is facing a class action lawsuit after one of its customers alleged in court documents that the banker profited at clients’ expense.
The claim is that PNC placed invested cash from clients’ investment accounts into affiliated PNC Bank accounts, earning customers a mere 0.04% in interest while other banks and money market accounts offered rates around 5%.
“Because PNC Bank’s accounts pay far below market rates of interest, plaintiff and other class members have lost significant amounts of interest they would have otherwise earned had PNC Financial swept their cash into bank accounts that pay a reasonable market rate of interest,” the lawsuit said.
The client, a Michigan resident named Marlene Dehner, filed the case Wednesday in the U.S. District Court for the Western District of Pennsylvania on behalf of all retirement account investors at PNC Investment whose invested cash was moved into PNC Bank accounts.
The suit alleges that PNC financial advisers chose PNC Bank accounts even though they paid only 0.04% while its competitors paid more. For example, Vanguard offered interest payments of 4.5% and Fidelity offered 5% interest on its bank accounts when the Federal Reserve began raising its target federal funds rate from 2018 through March 2019 and again from March 2022 onwards.
PNC Financial Services representatives declined to comment on the lawsuit.
The case involves what are called “cash sweep” accounts, which is a type of bank or brokerage account that is linked to an investment account and automatically transfers funds when the balance is above or below a preset minimum.
The defendant alleges that PNC Investments breached its fiduciary duty to act in the best interest of its clients to place their cash where they would receive a “fair and reasonable” rate of interest.
PNC Financial is the parent company of PNC Investments. The class action involves more than 100 class members and the amount in question exceeds $5 million, exclusive of interest and costs, the lawsuit said.
“Defendants did not negotiate higher and reasonable rates of interest for their customers’ cash sweep deposits, but instead it worked in consultation with its affiliated bank to set artificially and unreasonably low interest rates for deposit accounts in the program,” the suit said.
First Published: February 1, 2025, 10:30 a.m.
Updated: February 3, 2025, 1:09 p.m.
