Schwab Faces Fiduciary Duty Suit Over Cash Sweep Program (1)

Charles Schwab Corp. customers brought a class action against the company in federal court for breaching its fiduciary duties to them in the way it handles their funds in its cash sweep program.

In the program, Schwab and its wholly-owned broker-dealer automatically sweep uninvested cash balances in its customers’ accounts and deposit them in affiliated banks, where they can earn interest. Schwab acts as its customers’ agents in operating the program, the complaint filed in the US District Court for the Central District of California says.

But the complaint also says that while acting as its customers’ agent, Schwab used ...