SEC Drops Investigation into LPL's Cash Sweep Practices

LPL is the second major advisory firm to see the SEC conclude its probe without enforcement action.

Published on Feb. 24, 2026

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The Securities and Exchange Commission has concluded its investigation into LPL Financial's cash sweep program for advisory accounts and will not recommend any enforcement action against the firm. This comes after the SEC previously took action against other firms like Wells Fargo and Merrill Lynch over similar cash sweep practices, but decided not to pursue charges against LPL or Morgan Stanley.

Why it matters

The SEC's decision not to take action against LPL is significant, as the regulator has cracked down on advisory firms accused of not adequately disclosing or optimizing cash sweep programs that can impact client yields. However, LPL and other firms still face ongoing lawsuits from clients alleging breaches of fiduciary duty related to cash sweep practices.

The details

According to a regulatory filing, LPL received an SEC information request in August 2024 regarding its cash management program for advisory accounts. On January 23, 2026, the SEC informed LPL that it had concluded its investigation and would not recommend any enforcement action. This contrasts with the SEC's actions against Wells Fargo and Merrill Lynch, which paid a combined $60 million in civil penalties to settle charges over their cash sweep practices. LPL has denied the claims in the lawsuits it faces and said it has no plans to change its cash sweep pricing.

  • In August 2024, LPL received an SEC information request regarding its cash management program.
  • On January 23, 2026, the SEC informed LPL it had concluded its investigation and would not recommend enforcement action.
  • In April 2024, an advisory client filed a lawsuit in California alleging customers lose money on cash positions due to LPL's cash sweep practices.
  • In July 2024, putative class action lawsuits were filed against LPL over its cash sweep programs.
  • As recently as February 2025, Osaic was hit with a cash sweep action lawsuit.

The players

LPL Financial

A major independent broker-dealer and investment advisory firm that was investigated by the SEC over its cash sweep practices for advisory accounts.

Securities and Exchange Commission (SEC)

The federal agency that regulates the securities industry and investigated LPL and other firms over their cash sweep programs, taking enforcement action against some but not others.

Wells Fargo

A financial services firm that paid a civil penalty to the SEC to settle charges related to its cash sweep practices.

Bank of America's Merrill Lynch

A financial services firm that paid a civil penalty to the SEC to settle charges related to its cash sweep practices.

Morgan Stanley

A financial services firm that, like LPL, saw the SEC drop its investigation into the firm's cash management program.

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What they’re saying

“In August 2024, the company received a request for information from the SEC regarding certain elements of the company's cash management program for corporate advisory accounts. On January 23, 2026, the SEC informed the company that it had concluded its investigation and did not intend to recommend an enforcement action.”

— LPL Financial (LPL Financial regulatory filing)

What’s next

LPL and other firms still face ongoing lawsuits from clients alleging breaches of fiduciary duty related to their cash sweep practices. The outcome of these lawsuits could have significant implications for the industry.

The takeaway

The SEC's decision not to take enforcement action against LPL over its cash sweep program, while cracking down on some other firms, highlights the complex and evolving regulatory landscape around these types of client account practices. Advisory firms will need to continue closely monitoring their cash management policies to ensure they are acting in their clients' best interests.