JPMorgan in crosshairs of cash policy lawsuit; training AI what not to say about money; brokerage clients win $13M arb award but may get nothing

INDUSTRY NEWS: The long list of firms being sued over their “cash sweeps” policies keeps growing longer. You can now add JPMorgan to its rivals Wells Fargo, Morgan Stanley, UBS, Ameriprise and LPL Financial.

A legal team that has already sued Wells, LPL and Ameriprise has now filed a putative class-action suit against JPMorgan in federal court in New York, alleging the megabank doesn't look out for its clients' best interests with its handling of their uninvested cash. The suit contends JPMorgan takes "for itself and its affiliates the vast majority of the compensation earned from its customers' cash at the expense of its customers and principals, who receive only a minimal return on their cash deposits."

Read: JPMorgan joins firms sued over cash sweeps

TECHNOLOGY: When it comes to building AI tools for advisors, feeding the learning technology what to say is just as important as telling it what not to say. And for the advisory world, that often means making sure the AI is not giving out financial predictions when a user asks a question. 

This is an ongoing process for global firms and AI developers like Morningstar, which deployed the AI-driven chatbot Mo last year and uses AI internally to, for example, read and interpret extensive documents that need language translation. It's critical to build "guardrails" within the AI so that it does not misinterpret or make unwanted predictions, said Lee Davidson , chief analytics officer at the investment research firm. 

Read: Don't speak: How firms like Morningstar teach AI what not to say

REGULATION AND COMPLIANCE: A FINRA arbitration panel has awarded more than 30 former clients of the now-expelled broker SW Financial nearly $13.5 million over allegations its brokers used their money as a "personal slush fund" for unsuitable trades.

But industry experts say SW Financial's bar from the industry raises serious questions over whether the claimants in the case will ever be able to collect. 

Read: A brokerage gets hit with a $13.5M award, but it's likely uncollectible

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