CHICAGO (CN) – LaSalle Bank deducted fees from custodian investment accounts for more than two decades without telling accountholders, who found out about the secret charges when LaSalle merged with Bank of America and the fees stopped, according to a class action in Cook County Chancery Court.
Named plaintiff Stephen Richek says he opened a custodian account with LaSalle in 1985, authorizing the bank to invest his cash balances in money markets and mutual funds.
The bank did not tell him that such transactions triggered a “sweep fee” or “daily cash re-investment fee.”
“Unbeknownst to plaintiffs, defendants were receiving reinvestment (sweep) fees directly from the investment vehicles,” according to the complaint. “The re-investment or ‘sweep’ fees were as much as 35 or 45 basis points and were based on the average daily invested balance that had been ‘swept’ from the custodian accounts into the reinvestment vehicle and the unique fee basis of a particular investment vehicle. This fee was not agreed to and was not disclosed on the custodian account statements sent to plaintiff.”
LaSalle merged with Bank of America in 2007. When Richeck’s account was converted to Bank of America in 2009, he got a letter saying that the sweep fees had been canceled.
“This was the first time plaintiff became aware” of the fees, the complaint states.
Bank of America said it didn’t know how much money had been taken from his account over the decades, saying there were “no recorded fee schedules for ‘sweep’ fees” and that it “could not accurately portray how sweep fees were assessed from inception to current,” according to the complaint.
Richek sued LaSalle Bank Corp., Bank of America, US Trust, Bank of America Corp., and Bana Holding Corp. for breach of fiduciary duty and breach of contract.
He seeks an “accounting and full refund” for the class.
The class’s lead counsel is Terry Saunders with Saunders & Doyle.