Iorio Altamirano LLP is investigating claims on behalf of SunTrust customers who invested in non-traditional exchange traded funds (ETFs). If you have lost money with SunTrust, contact New York securities arbitration lawyers Iorio Altamirano LLP for a free and confidential evaluation of your account.
SunTrust and FINRA entered into a Letter of Acceptance, Waiver, and Consent (“AWC”) on May 18, 2020, over allegations that between January 2015 and January 2018, SunTrust violated FINRA rules. Specifically, that it:
- Failed to establish, maintain and enforce a supervisory system, including written supervisory procedures (“WSPs”) that were reasonably designed to ensure compliance with FINRA Rule 2111 related to solicited sales of non-traditional ETFs by the firm’s registered representatives.
- The firm’s supervisory failures resulted in losses of approximately $584,466 in 95 customer accounts serviced by 17 Private Financial Advisor representatives.
As part of the AWC, SunTrust was censured and agreed to a fine of $50,000. SunTrust also agreed to pay $584,466 in restitution to customers. Prior to the conclusion of FINRA’s examination, SunTrust voluntarily paid over $445,836 in restitution to 30 customers that the firm identified through its own investigation who held solicited positions of non-traditional ETFs. It then paid additional restitution of $138,629 to 57 customers who had purchased solicited positions of non-traditional ETFs and sold them at a loss prior to January 2018.
SunTrust is a bank-affiliated introducing broker-dealer. The firm is headquartered in Atlanta, GA and has been a FINRA member firm since 1986. SunTrust has more than1,800 branches and 1,400 registered representatives.
Non-Traditional Exchange Traded Funds (ETFs)
Non-traditional ETFs are complex and risky products that are generally not suitable for retail investors planning to hold them for more than one trading session. They are certainly not suitable for long-term investors. They can be particularly vulnerable to volatile markets, as they are leveraged or inverse to the markets. In other words, they track an underlying index or benchmark, the inverse of that benchmark, or both. They are designed to return, on a daily basis, a multiple of the performance of that index or benchmark, or the opposite of the daily performance by profiting from an index or benchmark decline. Non-traditional ETFs seek to achieve this performance over a single trading session and “reset” daily. Investors holding them for more than one trading session risk a divergence between the daily returns of the non-traditional ETF and the performance underlying index or benchmark.
SunTrust executed approximately 252 solicited non-traditional ETF transactions in the 95 retail customer accounts totaling over $2.8 million in principal amount. SunTrust stopped selling non-traditional ETFs in September 2016.
A FINRA restitution order does not preclude investors from pursuing their own claims to seek restitution or other available remedies. Investors harmed by SunTrust’s supervisory failures may have a claim against the firm.
Prior Disciplinary History
SunTrust has prior disciplinary history. In 2017, the SEC charged it with improperly recommending higher-fee mutual funds when there were cheaper shares of the same funds available. The firm paid a penalty of $1.1 million. FINRA has also fined the firm $80,000 in 2014, $400,000 in 2011, $900,000 in 2010, $700,000 in 2008, and $150,000 in 2006.
If you have lost money with SunTrust, contact New York securities arbitration lawyer Jorge Altamirano of Iorio Altamirano LLP at email@example.com or toll-free at (855) 430-4010 for a free and confidential evaluation of your account.
Iorio Altamirano LLP is a securities arbitration law firm based in New York, NY. We pursue FINRA arbitration claims nationwide on behalf of investors to recover financial losses arising out of wrongful conduct by financial advisors and brokerage firms.