SunTrust Investment Services Ordered To Pay $1.4 Million By FINRA for Alleged Unsuitable Unit Investment Trust (UIT), Closed-End Fund (CEF) and Mutual Fund Transactions.
The Financial Industry Regulatory Authority (FINRA) has issued an order imposing fines on SunTrust Investment Services, Inc. in the amount of $1.44 million to resolve charges related to unsuitable unit investment trust (UIT), closed-end fund (CEF) and mutual fund transactions, according to a July 22, 2010 FINRA securities & investment regulatory press release. $900,000 reportely represents a fine that includes $224,000 in disgorgement of broker commissions earned on the alleged unsuitable trades while $540,000 represents restitution to certain customers who allegedly incurred brokerage account losses.
According to FINRA, SunTrust Investment Services engaged in 294 unsuitable short-term Unit Investment Trust (“UIT”), Closed-End Fund (“CEF”) and mutual fund transactions in certain customer accounts that allegedly involved recommending a short-term trading strategy of buying and selling Unit Investment Trusts and Closed-End Funds less than a year after purchase and using the proceeds to purchase other Unit Investment Trusts or Closed-End Funds, often with sales load fees as high as 4 and 5%.
In addition, FINRA reportedly found that SunTrust failed to ensure that eligible customers received the maximum sales charge discount on UIT purchases and lacked adequate systems and procedures for monitoring and supervising UIT, CEF and margin transactions.
In settling this matter, SunTrust Investment Services neither admitted nor denied the charges, but consented to the entry of FINRA’s findings.
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