Osaic Faces Second Class Action Over Cash Sweep Interest Rates

Two customers claim the broker-dealer kept sweep account rates artificially low while collecting higher fees from participating banks.

By the Family Office Real Estate Daily Desk·Monday, September 21, 2026·2 min read

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What are the allegations in the new class action lawsuit filed against Osaic over cash sweep interest rates?

Osaic has been hit with a second class action lawsuit, filed in Arizona federal court by customers Robin Nackman and Douglas Whittaker, alleging the broker-dealer kept cash sweep account interest rates artificially low to generate profits from fees paid by participating banks. The complaint contends Osaic's rates were significantly lower than those of competitors including Vanguard, Fidelity, and Baird, and that Osaic did not adjust rates even when the Federal Reserve raised interest rates.

Key facts

Osaic customers Robin Nackman and Douglas Whittaker filed a class action suit in Arizona federal court alleging a 'dramatic underpayment of interest' to Osaic customers.
The complaint states that Osaic 'categorically has not adjusted interest rates paid to customers based on economic or prevailing market factors, but rather has kept the sweep rates artificially depressed as to reap substantial profits for itself.'
Osaic's cash sweep programs for brokerage, advisory, and IRA accounts operate through clearing firms Pershing and National Financial Services, which establish deposit accounts at each program's bank.
The plaintiffs alleged that interest rates at Osaic competitors including Vanguard, Fidelity, and Baird were 'significantly higher' than Osaic's rates for similar sweep programs.
A prior similar class action suit against Osaic was filed by a customer in early 2025 and remains ongoing, according to the article.
An Osaic spokesperson said 'we deny the allegations and will be defending this matter vigorously' and declined further comment because the matter is pending.

Osaic Faces Second Class Action Over Cash Sweep Interest Rates — Image: editorial illustration · Story sourced from WealthManagement.com

Osaic has been hit with a second class action lawsuit alleging the firm kept cash sweep account interest rates artificially low to maximise its own profits. Robin Nackman and Douglas Whittaker filed the suit in Arizona federal court in September 2026, claiming Osaic violated contractual and fiduciary obligations to customers.

The plaintiffs argued that Osaic failed to adjust sweep rates in line with economic or market conditions. Instead, the firm kept rates depressed while earning higher returns from fees paid by participating banks, the complaint said. Osaic customers with brokerage, advisory and IRA accounts access sweep programs through clearing firms Pershing and National Financial Services, which establish deposit accounts at program banks.

Nackman and Whittaker alleged that banks paid Osaic fees in exchange for the significant cash volumes the firm directed into sweep programs. The banks used those deposits for investment or lending. The fees reduced the interest Osaic paid on customer balances, the suit said.

The plaintiffs claimed Osaic's sweep rates lagged those of competitors including Vanguard, Fidelity and Baird. Even as the Federal Reserve raised interest rates over the past several years, Osaic kept its rates steady, the complaint said. The result was a dramatic underpayment of interest to customers, the plaintiffs alleged.

Osaic previously faced a similar class action filed in early 2025, which remains ongoing. Several initial complaints in that case have been dismissed. The latest suit asks the court to certify a class and award actual damages, punitive damages and other profits.

Cash sweep litigation has spread across the industry. Plaintiffs filed class actions against Betterment and Commonwealth in recent months, alleging similar claims. The Securities and Exchange Commission settled charges against Merrill Lynch and Wells Fargo in January 2025 and closed an inquiry into Morgan Stanley the following May. The agency dropped a similar inquiry into LPL Financial earlier this year.

An Osaic spokesperson said the firm denies the allegations and will defend the matter vigorously. The spokesperson declined further comment on the pending litigation.

The Deployment Angle

Family Office Real Estate Daily Desk · our analysis, not the source's

Family offices holding operational cash at broker-dealers should treat this litigation wave as a prompt to audit sweep program terms and rate histories. Request the sweep program disclosure documents, identify the participating banks and the fee structure, and compare the effective yield against direct alternatives such as government money-market funds or Treasury bills purchased on the secondary market. If the spread exceeds 50 basis points for comparable durations, the sweep program is likely a profit centre for the broker-dealer rather than a fiduciary accommodation.

For accounts holding material balances, negotiate a separate account or instruct the custodian to exempt uninvested cash from the automatic sweep. Direct the cash instead into institutional money-market funds or short-duration separately managed accounts where the family office principal controls the manager selection and fee schedule. This eliminates the embedded revenue-sharing arrangement and often lifts net yield by 100 to 200 basis points without materially increasing credit or liquidity risk.

The regulatory pattern is instructive. The SEC settled with Merrill Lynch and Wells Fargo but closed the Morgan Stanley and LPL inquiries without enforcement. That divergence suggests the commission is focused on disclosure failures and rate-setting practices that deviate sharply from market benchmarks, rather than sweep programs as a category. Family offices negotiating custody agreements should require quarterly rate reconciliation reports that show the sweep yield, the prevailing federal funds rate and the yield on comparable Treasury securities. If the broker-dealer cannot or will not provide that transparency, move the account to a custodian that will.

Questions this story answers

01What are Osaic customers alleging in the new cash sweep class action?

Osaic customers Robin Nackman and Douglas Whittaker allege that Osaic kept cash sweep account interest rates artificially low while earning higher returns from fees paid by participating banks, violating contractual, implied, and fiduciary obligations to customers. The complaint argues Osaic did not adjust rates based on economic or prevailing market factors, even when the Federal Reserve raised interest rates.

02How does Osaic's cash sweep program work according to the lawsuit?

According to the complaint, uninvested cash from Osaic customer brokerage, advisory, and IRA accounts is swept into interest-bearing accounts through clearing firms Pershing and National Financial Services, which establish deposit accounts at participating banks. Those banks pay fees to Osaic, which the plaintiffs allege reduced the interest paid to customers on their cash balances.

03Has Osaic faced cash sweep lawsuits before?

Yes. A customer filed a similar cash sweep class action against Osaic in early 2025, which remains ongoing according to the article. The latest suit filed by Nackman and Whittaker in Arizona federal court is described as an additional class action on top of that prior case.

04What are the plaintiffs asking for in the Osaic cash sweep lawsuit?

Nackman and Whittaker are asking the court to declare the case a proper class action and are seeking actual damages, including punitive damages, as well as other profits from Osaic, according to the complaint filed in Arizona federal court.

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