Galvin Asks BDs If They'll Raise Sweep Account Interest Rates After Fed Hike

By Melanie Waddell

News March 18, 2022 at 02:30 PM

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William Galvin, Massachusetts' top securities regulator, is probing six broker-dealers about whether they intend to increase the rate of interest on their sweep accounts given the recent interest rate hike.

The letters were sent to TD Ameritrade, Merrill Lynch, LPL Financial, Ameriprise and Securities America.

The Federal Reserve announced Wednesday that interest rates will be raised 0.25% with additional increases expected later this year.

Inflation is also putting strain on consumers, he says.

"Consumers are being squeezed right now," Galvin said in a statement. "They're being hit with the double-whammy of higher credit card and loan rates on one end and low rates of interest on their bank accounts and other investments."

"It's simply unfair that consumers are being asked to pay more on credit cards and loans, while the banks are pocketing the interest rate hikes that should be earned on custodial money instead of raising interest rates for people who are trying to keep their savings," Galvin said.

Sweep accounts are often used by brokerage firms to hold an investor's money while it is waiting to be invested.

Pictured: William Galvin, Massachusetts secretary of state

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