Magazine article American Banker

Trust Clients Sue over 'Sweep Fees.' (Heirs and Beneficiaries, Provident National Bank, Mellon Bank)

Magazine article American Banker

Trust Clients Sue over 'Sweep Fees.' (Heirs and Beneficiaries, Provident National Bank, Mellon Bank)

Article excerpt

Banks in California, New York, and Pennsylvania are coming under scrunity by a group of disgruntled clients who claim the are charged exorbitant fees for the management of private trusts.

The Philadelphia-based group, called Heirs and Beneficiaries, filed suit las August in the U.S. District Court for the Eastern District of Pennsylvania against Provident National Bank and Mellon Bank. No court date has been set.

The plaintiffs claim that trust banks benefit unfairly from socalled sweep fees, charged when a bank invests idle funds in short-term money market or mutual funds accounts. The plaintiffs are also suing on other grounds, and are seeking greater control over their trust accounts.

Banks in Pennsylvania have earned more than $400 million in sweep fees over the past eight years, according to Edward E. Pollard, chairman of Heirs and Beneficiaries, which was set up last year to sponsor the lawsuit.

But banks in Pennsylvania are not alone in charging the disputed fees. Mr. Pollard said that Bank of New York began to charge him a sweep fee six months ago, and the fees he pays the New York-based bank to manage his trust increased 43% in 1991.

A Bank of New York spokesman said bank policy prevented him from commenting on individual customers like Mr. Pollard. He noted that the bank's investment performance was excellent in 1991, and trust account fees most likely rose because charges are often tied to the value of an account.

The beneficiaries group wants to pressure banks to reduce or drop some of their fees and to reimburse their customers. …

Search by... Author
Show... All Results Primary Sources Peer-reviewed

Oops!

An unknown error has occurred. Please click the button below to reload the page. If the problem persists, please try again in a little while.