HYANNIS – With Federal Reserve interest rates on the rise, state officials have called for an investigation into brokerage firms that may not be best-serving Massachusetts investors.
Secretary of State William Galvin voiced concerns after this week’s announcement that interest rates will increase 0.25% with more hikes anticipated in coming months.
“Consumers are being squeezed right now,” Galvin said.
“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 investments.”
Galvin assigned his securities division to investigate if certain brokers and their affiliated banks are failing to serve customers by not raising interest rates paid to clients who have sweep accounts.
Sweep accounts can be used to hold an investor’s money while it is waiting to be invested.
TD Ameritrade, Merrill Lynch, LPL Financial, Ameriprise, Securities America, and SoFi were the broker-dealers who received letters from Galvin’s office Wednesday.
The letters asked if the groups would be offering to raise interest rates on sweep accounts for customers.
Galvin said it’s wrong for banks to not watch out for their customers.
“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.
By Brian Engles, CapeCod.com NewsCenter
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