By Xenom 
If you’ve got money in a PNC retirement account, you might be owed compensation from the cash sweep lawsuit currently working its way through the courts.
I’ve spent days analysing the legal filings, and the details are eye-opening.
Recent Developments in the PNC Bank Sweep Litigation
Two major class actions have targeted PNC’s practice of moving retirement clients’ uninvested cash into low-yielding accounts:
Vallin v. PNC Investments LLC (Case No. 224-cv-01295) was filed in September 2024 in the U.S. District Court for the Western District of Pennsylvania and remains active.
Hegazy v. PNC Investments LLC (Case No. 224-cv-01651) was filed in December 2024 but was voluntarily dismissed in January 2025 without prejudice – meaning it could return.
The core claim? PNC allegedly prioritised its own profits by paying clients rock-bottom interest while earning substantial returns on their money.
Shocking Interest Rate Disparities Revealed
Court documents from the Vallin case expose just how low PNC’s rates allegedly were:
- PNC paid customers just 0.05% to 1.55% on swept cash since 2023
- Competitors like Fidelity and Baird offered up to 4.15% during the same period
- Money market funds were paying around 5%
- The national average savings rate was 0.46%
That’s not just a small difference – we’re talking about PNC allegedly paying rates up to 100 times lower than available alternatives.
For perspective: If you had £10,000 in uninvested cash, that’s potentially £400+ in lost interest annually.
How PNC’s Bank Deposit Sweep Program Actually Works
The program at the heart of this controversy is PNC’s “Proprietary Bank Deposit Sweep Program” (BDSP).
Here’s what happens behind the scenes:
- Your uninvested cash gets automatically swept into PNC Bank accounts
- PNC places this money in a combination of Money Market Deposit Accounts (MMDA) and Negotiable Order of Withdrawal (NOW) accounts
- Your funds get FDIC insurance up to £250,000
- PNC pays you tiered interest rates based on your balance (the rates at issue in the lawsuit)
- PNC keeps the difference between what it earns on your money and what it pays you
The lawsuit claims this difference – called the “spread” – generated massive profits for PNC while shortchanging clients.
PNC’s own disclosure document states their revenue from this program “may be greater than revenues from sweep options at other firms or other potential investment vehicles.”
Four Key Legal Issues That Could Impact Your Money
The lawsuit raises several critical legal questions that will determine whether account holders get compensation:
1. Is PNC a Fiduciary for Retirement Accounts?
The Hegazy complaint specifically cited language in PNC’s “Retirement Account Customer Agreement” that allegedly establishes PNC as an “agent” and fiduciary.
This matters enormously because fiduciaries must put client interests first – something plaintiffs claim PNC failed to do by paying below-market rates.
The lawsuit states that PNC was legally required to “act with the care, skill, prudence and diligence… that a prudent person… would use.”
2. Did PNC Breach Its Contractual Obligations?
Court filings allege that PNC’s brokerage agreement contained specific language requiring interest rates “believed to be fair and reasonable” and “negotiated at arm’s length.”
The massive gap between what PNC paid versus competitors is the key evidence that these obligations were allegedly breached.
3. Were PNC’s Disclosures Adequate?
While PNC did disclose it might earn more revenue through this program, the lawsuit claims these disclosures weren’t clear enough about:
- The size of the potential interest rate gap
- How much extra money PNC would make
- Available alternatives that could pay significantly higher rates
4. Should PNC Have Adjusted Rates as Market Conditions Changed?
A powerful argument in the Vallin case notes that PNC allegedly failed to meaningfully increase sweep rates even as the Federal Reserve raised interest rates significantly starting in 2022.
This alleged unresponsiveness to market conditions suggests the rates weren’t merely low but potentially set in bad faith.
Real-World Impact on Retirement Savers
For typical retirement account holders, this isn’t just an abstract legal dispute – it’s about real money potentially missing from your retirement savings.
Take this example:
A 55-year-old with a PNC IRA keeping an average of £20,000 in uninvested cash between 2023-2025 might have earned just £310 in interest (at 0.05%-1.55%).
The same money in a competitive money market fund paying 4.15% would have generated £1,660 – a difference of £1,350.
Now multiply this across thousands of account holders over several years, and you can see why this lawsuit seeks over £5 million in damages.
The Bigger Picture: Industry-Wide Scrutiny
PNC isn’t alone in facing these allegations. Similar lawsuits target many major financial institutions including:
- Wells Fargo
- Merrill Lynch (Bank of America)
- JPMorgan Chase
- Morgan Stanley
- UBS
- Charles Schwab
The U.S. Judicial Panel on Multidistrict Litigation considered consolidating these cases but decided in February 2025 that each firm’s practices were unique enough to require separate litigation.
Regulatory action is also intensifying. The SEC recently imposed £60 million in combined penalties on Wells Fargo and Merrill Lynch for similar cash sweep practices. The regulatory body found these firms “failed to act in clients’ best interests” by offering affiliated bank sweeps while receiving significant financial benefits.
- Also Read: Biden Pardons Garvey, Ragbir, and Smith Pradia.
7 Practical Steps for PNC Retirement Account Holders
If you have a PNC retirement account, here’s what you should consider:
- Review your statements to see what interest rate you’re earning on uninvested cash
- Calculate your potential losses by comparing PNC’s rate to what you could have earned elsewhere
- Download and save your account statements showing cash balances and interest (these could be valuable for claims purposes)
- Consider alternative cash management options like money market funds that may offer higher yields
- Check your account documentation to confirm if you’re enrolled in the BDSP program
- Track updates on the Vallin case through the court website or financial news
- Consult a financial adviser about optimising your retirement account structure
Five Critical Questions About the PNC Lawsuit Answered
Will all PNC retirement account holders get compensation?
If the lawsuit succeeds, people enrolled in PNC’s Bank Deposit Sweep Program during the relevant time period would likely be eligible for compensation. The exact class definition will be determined as the case progresses.
How much money might account holders recover?
While specific amounts can’t be predicted yet, damages would likely be calculated based on:
- The difference between PNC’s rates and reasonable market rates
- How much cash was kept in sweep accounts
- How long the money remained there
Why was the Hegazy case voluntarily dismissed?
Legal experts suggest this was likely a strategic move rather than a judgment on the merits. Possible reasons include:
- Consolidating efforts with the Vallin case
- Refining legal strategy
- Addressing procedural issues
The “without prejudice” nature of the dismissal means similar claims could be refiled later.
What defenses is PNC likely to raise?
Based on court documents and similar cases, PNC will likely argue:
- Their disclosures were adequate and transparent
- The FDIC insurance provided value justifying lower rates
- They operated within their contractual rights
- No specific fiduciary duty applies to sweep rate-setting
When might the case be resolved?
The Vallin case remains in early stages. Complex class actions typically take 2-3 years to resolve, though settlements can happen earlier. Court records show contested motions regarding the appointment of interim lead counsel, suggesting multiple law firms see value in the case.
What This Means for the Future of Bank Sweep Programs
If plaintiffs succeed, the impacts could extend far beyond PNC:
- Financial institutions might be forced to offer more competitive interest rates
- More transparent disclosures about rate comparisons might be required
- Some firms might abandon affiliated bank sweeps entirely
- Cash management options with higher yields might become the default
The litigation reflects a broader trend of increased scrutiny on financial institutions’ handling of client cash, particularly in retirement accounts where fiduciary standards may apply.
Stay Informed About Your Rights
The PNC retirement account cash sweep lawsuit represents a significant challenge to practices that have benefited banks at the potential expense of retirement savers.
While the legal process unfolds, the most important thing for account holders is to stay informed and take practical steps to manage your cash effectively.
This situation highlights why vigilance about seemingly small details like cash sweep rates can significantly impact your long-term financial health.