Seven months after the Atlanta Journal and Constitution (AJC) reported that SunTrust Bank was negotiating with regulators to buy back $500 million in auction rate securities from SunTrust customers, the bank has decided not to pay back all of its customers. According to a statement released by the Financial Industry Regulatory Authority (FINRA) in May 2009, four (4) other investment firms agreed to repurchase $554 million worth of auction rate securities from investors who were misled about the liquidity of their investments, but SunTrust Investment Services, Inc. and SunTrust Robinson Humphrey, Inc. ? both of which are subsidiaries of SunTrust Bank based in Atlanta ? withdrew a previous offer to settle with FINRA.
SunTrust claims that “it has already bought back auction rate securities from substantially all of the clients who would have been covered by the preliminary settlement; however, [it has] not been able to to come to agreement on other terms.” SunTrust fails to say what it means when it asserts that it has settled with “substantially” all clients, how many clients it hasn’t settled with, the amount of claims that it has not settled or what other terms it was unwilling to agree on.
“It is important than anyone who invested in auction rate securities know what their rights are,” says Craig T. Jones, an attorney with the Atlanta law firm of Page Perry. “That is particularly true for anyone who bought these securities from SunTrust and has been under the impression that SunTrust was planning to redeem all of the auction rate securities it sold.” Page Perry is a securities fraud firm which is representing a number of investors who were misled into purchasing auction rate securities?which were universally marketed as highly liquid cash equivalents, when in fact their liquidity depended upon the success of auctions which were manipulated by brokers and which ultimately collapsed in early 2008, leaving thousands of investors stranded with purported cash equivalents which they could not cash out of. SunTrust was one of several investment brokers who were fined by the SEC under a 2006 order for violations of the federal Securities Act in connection with the sale of auction rate securities, but that order did not mandate any refund of investor money. In 2006, the auction rate securities market was still functioning and it was possible for investors to cash out, but since the collapse of the auctions in February 2008, many investors who want to liquidate their auction rates securities have been left with two choices: either sell them at a steep discount to speculators who are willing to wait out the market collapse, or take legal action on their own to recoup the full value of their losses.
According to attorney Jones, “there was a headline in the business section of the AJC back in September 2008 which said: ‘SunTrust May Buy Back Securities’, and a sub-caption which read ‘Deal would cost bank $500 million’. Unfortunately that deal never happened. Those SunTrust investors who haven’t received a refund will now need to hire a lawyer to get their money back now that the bank has refused to consummate the FINRA settlement.” Because there are statutes of limitations which put an expiration date on a lawsuit, investors with potential claims should contact a lawyer now rather than later. The law firm of Page Perry is based in Atlanta but has a nationwide practice of representing defrauded investors. “We will let you know what your options are,” says Jones, “so you can decide on the best course of action for you and your family or business.”