SEC Investigating SunTrust Banks and SunTrust Investment Services for Fraud Charges Related to Mutual Fund Sales
Posted on Monday, March 20th, 2017 at 4:16 pm
Erez Law is currently investigating SunTrust Banks and its broker-dealer and insurance arm of the company, SunTrust Investment Services, regarding allegations that brokers across the country recommended costly mutual funds when cheaper options were available for those customers.
The U.S. Securities and Exchange Commission is currently investigating whether SunTrust Investment Services bought costly mutual funds on behalf of clients that charged them 12b-1 marketing fees rather than other mutual funds that don’t have this added fee. Mutual funds that charge fees, such as the 12b-1 marketing fee, often pay higher commissions to companies and brokers. When a broker chooses to recommend a mutual fund with a higher fee or commission, they are violating the federal Investment Advisers Act, which requires money managers with the SEC to act in the best interests of the clients.
The SEC’s enforcement division “made a preliminary determination to recommend that the SEC bring an enforcement action” against SunTrust Investment Services. As disclosed in SunTrust’s annual report filed with the SEC in early March 2017, the SEC is investigating this matter and considering bringing fraud charges against SunTrust Banks. If these allegations prove true, SunTrust Banks could face fines. and loss of its investment business income and its fast-track status for issuing new bonds and other securities.
Pursuant to FINRA Rules, member firms are responsible for supervising a broker’s activities during the time the broker is registered with the firm. Therefore, Suntrust Investment Services may be liable for investment or other losses suffered by its customers.
Erez Law represents investors in the United States for claims against SunTrust Investment Services regarding recommendations to invest in mutual funds with high commissions and fees. If you were a client of SunTrust Investment Services and have experienced investment losses, please call us at 888-840-1571 or complete our contact form for a free consultation. Erez Law is a nationally recognized law firm representing individuals, trusts, corporations and institutions in claims against brokerage firms, banks and insurance companies on a contingency fee basis.