The Financial Industry Regulatory Authority (FINRA) has ordered SunTrust Investment Services, Inc. of Atlanta, GA (“SunTrust”), to pay $1.44 million in fines and restitution for misconduct arising out of unsuitable recommendations and churning the accounts of 17 mostly elderly customers, according to an article by J. Scott Tinsley in the Atlanta Journal Constitution (“SunTrust unit fined for improper trades”). $900,000 of that amount is a fine, which includes nearly $224,000 in disgorgement of commissions flowing from the unsuitable trades. The remaining $540,000 will serve as restitution to the customers who incurred losses.
SunTrust, through two of its brokers, recommended 294 unsuitable transactions in short-term unit investment trusts, closed-end funds, and mutual funds. Most of the victims were elderly or disabled. The brokers also “churned” many of the accounts, causing them to be traded with excessive frequency and on margin in order to gin up commissions and margin interest charges with no benefit to the customers. SunTrust charged these customers over $133,000 in margin interest and $224,000 in commissions.
SunTrust approved each of the improper transactions despite the presence of numerous red flags that should have alerted it to its brokers’ misconduct.
Prior to its sanction of SunTrust in this matter, FINRA sanctioned one of the individual brokers for misconduct that occurred at SunTrust and later Merrill Lynch, permanently barring him from working in the securities industry.
What is going on over at SunTrust? Why are they hiring and not supervising these bad brokers? SunTrust, which still refuses to admit any wrongdoing, apparently will not explain. A SunTrust spokesman declined to comment, according to the article.
Investors can obtain information about certain complaints and disciplinary actions filed against a broker or brokerage firm by using FINRA’s BrokerCheck, which can be accessed at www.finra.org/brokercheck.
Page Perry is an Atlanta-based law firm with over 125 years collective experience representing investors in securities-related litigation and arbitration. While past results are not indicative of future success, Page Perry’s attorneys have recovered over $1,000,000 for clients on more than 35 occasions, and have aided clients who have been the victims of financial adviser abuse and scams. Page Perry’s attorneys are actively involved in counseling institutional and individual investors in claims against SunTrust. For further information, please contact us.