Invest In Suntrust Mutual Fund: Secure Your Future

SunTrust Investment Services is a subsidiary of SunTrust Banks, which offers investment services and insurance. In 2017, the US Securities and Exchange Commission (SEC) charged SunTrust with improperly recommending higher-fee mutual funds to clients, collecting over $1.1 million in avoidable fees. The SEC investigation found that SunTrust breached its fiduciary duty to clients by recommending and purchasing costlier mutual fund share classes with 12b-1 marketing fees, without informing investors of cheaper share class options. To settle the charges, SunTrust agreed to pay a penalty of over $1 million and refund the overcharged fees to affected clients. This incident highlights the importance of transparency and acting in the best interests of clients when providing investment advice. Despite this setback, SunTrust remains a significant player in the financial services industry, and understanding the factors that make it a worthwhile investment option is essential for potential investors.

SunTrust's subsidiary settled a mutual fund fee case

SunTrust Investment Services, a subsidiary of SunTrust Banks, has been at the centre of a mutual fund fee case that resulted in a settlement of over $1 million. The case centred around allegations that the firm improperly recommended more expensive mutual share classes, collecting over $1.1 million in avoidable fees from its clients.

The U.S. Securities and Exchange Commission (SEC) charged SunTrust Investment Services with breaching its fiduciary duty to its clients by recommending and purchasing costlier mutual fund share classes that included 12b-1 fees, a type of marketing and distribution fee. These fees ultimately resulted in higher commissions for SunTrust. The SEC investigation found that cheaper share class options were available for the same mutual funds, and investors were not informed of their eligibility for these less costly options.

In response to the SEC's order, SunTrust agreed to pay a penalty of over $1.1 million, including disgorgement of over $34,000, without admitting or denying wrongdoing. The firm also began refunding the overcharged fees plus interest to affected clients. More than 4,500 accounts were impacted by this issue, and the SEC emphasised the importance of investment advisory representatives always recommending the best deal for their clients rather than acting in their self-interest.

This settlement serves as a reminder of the fiduciary duty investment firms owe to their clients and the potential consequences of failing to act in their clients' best interests. It also highlights the role of regulatory bodies like the SEC in protecting investors and ensuring fair practices in the financial industry.

SunTrust charged clients avoidable fees

SunTrust Investment Services, a subsidiary of SunTrust Banks, was charged by the U.S. Securities and Exchange Commission (SEC) with collecting more than $1.1 million in avoidable fees from clients. The SEC investigation found that SunTrust improperly recommended and purchased more expensive share classes of various mutual funds when cheaper shares of the same funds were available. This resulted in SunTrust collecting higher commissions from the funds, while investors were unaware of the availability of less costly options.

The SEC's order stated that SunTrust breached its fiduciary duty to act in the best interests of its clients by recommending and purchasing costlier mutual fund share classes that charged a type of marketing and distribution fee known as 12b-1 fees. These fees, which were not disclosed to investors, resulted in SunTrust receiving higher commissions. The SEC found that SunTrust's actions were self-serving and detrimental to everyday investors who rely on mutual funds to secure their financial future.

As a result of the SEC's investigation and charges, SunTrust Investment Services agreed to pay a penalty of over $1.1 million to settle the charges. Additionally, SunTrust began refunding the overcharged fees plus interest to affected clients. The investigation revealed that more than 4,500 accounts were impacted across more than 40 states, with some accounts incurring avoidable fees exceeding $2,000.

SunTrust's actions highlight the importance of investment advisory representatives acting in the best interests of their clients and recommending the most suitable financial products. It serves as a reminder that investment firms must prioritize their clients' interests above their own and ensure that all fees and charges are disclosed transparently.

SunTrust's case also underscores the role of regulatory bodies like the SEC in protecting investors' rights and ensuring fair practices in the financial industry. By taking enforcement actions and imposing penalties, the SEC helps maintain a level playing field and promotes investor confidence in the market.

SunTrust breached its fiduciary duty to clients

SunTrust has been accused of breaching its fiduciary duty to clients by recommending and purchasing costlier mutual fund share classes that include 12b-1 fees, a type of marketing and distribution fee. The Securities and Exchange Commission (SEC) charged SunTrust Investment Services, the investment services subsidiary of SunTrust Banks, with collecting over $1.1 million in avoidable fees from clients.

The SEC's investigation found that SunTrust failed to act in its clients' best interests by recommending more expensive share classes when cheaper shares of the same funds were available. This resulted in SunTrust collecting higher commissions from the funds, while clients incurred unnecessary fees.

In response to the SEC's investigation, SunTrust agreed to pay a penalty of over $1 million and refund the overcharged fees plus interest to affected clients. The firm also agreed to be censured and settled the charges without admitting or denying the findings.

In addition to the SEC investigation, SunTrust faced a lawsuit filed under the Employee Retirement Income Security Act (ERISA). The lawsuit alleged that SunTrust Bank's 401(k) plan engaged in corporate self-dealing, with plan officials breaching their fiduciary duties of loyalty and prudence by selecting proprietary funds that were more expensive and performed worse than alternative options. The lawsuit claimed that plan officials failed to remove or replace these underperforming funds.

The U.S. District Court for the Northern District of Georgia's Atlanta Division ruled in favour of SunTrust on the specific issue of whether successor fiduciary defendants could be held liable for failing to remedy their predecessor fiduciaries' alleged breaches in selecting affiliated funds. The court found that mere awareness of the inclusion of affiliated funds was not sufficient to charge the defendants with constructive knowledge of any improper selection process.

SunTrust failed to disclose conflicts of interest

SunTrust Banks' investment services subsidiary, SunTrust Investment Services (STIS), was charged by the U.S. Securities and Exchange Commission (SEC) with improperly recommending higher-fee mutual funds to clients. The subsidiary was found to have collected over $1.1 million in avoidable fees by suggesting more expensive share classes of various mutual funds when cheaper shares of the same funds were available. This breach of fiduciary duty led to STIS benefiting from higher commissions at the expense of their clients' financial interests.

The SEC investigation revealed that STIS failed to disclose certain conflicts of interest adequately and had deficiencies in its compliance policies and procedures related to mutual fund share class selection. Specifically, STIS did not inform investors that they were eligible for less costly share class options that did not include 12b-1 fees, a type of marketing and distribution fee. This resulted in investors paying higher fees, which ultimately benefited STIS and its Investment Advisory Representatives (IARs) financially.

STIS's actions were deemed "self-serving investment recommendations" by Aaron W. Lipson, Associate Regional Director for Enforcement in the SEC's Atlanta office. He further emphasized that investment advisory representatives have an obligation to recommend the best options for their clients rather than themselves. As a result of the investigation, STIS agreed to pay a penalty of over $1.1 million and refund the overcharged fees plus interest to the affected clients.

The failure to disclose conflicts of interest adequately can have significant repercussions, as it did for SunTrust. In the case of SunTrust, the lack of transparency led to financial losses for clients and damaged the trust between the company and its investors. It is essential for investors to be aware of such instances and make informed decisions about their investments.

SunTrust's clients received refunds

In 2017, SunTrust was charged with improperly recommending higher-fee mutual funds. The investment services subsidiary of SunTrust Banks collected more than $1.1 million in avoidable fees from clients by recommending more expensive share classes of various mutual funds when cheaper shares of the same funds were available. SunTrust Investment Services agreed to pay a penalty of more than $1.1 million to settle the charges. SunTrust also began refunding the overcharged fees plus interest to affected clients. More than 4,500 accounts were affected.

Frequently asked questions