On July 22, FINRA ordered SunTrust Investment Services to pay $1.44 million,
including $540,000 in restitution to investors, due to
unsuitable trades in unit investment trusts (UIT), closed-end funds (CEF), and
mutual funds transactions, according to a July 22, 2010 BusinessWire article.
New York Stock Exchange Rule 405 requires brokers to gather all of the
information necessary to ensure recommendations made to an investor are
suitable for that investor's needs. FINRA's Executive Vice-President,
James S. Shorris, claimed that SunTrust failed to meet its obligation
to recommend suitable investments to its customers.
The failure, Shorris said, "caused its customers, including elderly
customers, to incur significant losses."
FINRA's investigation into SunTrust found evidence of unsuitable short-term
UIT and CEF transactions and unsuitable margin transactions in 17 accounts,
mostly held by elderly and/or disabled customers, according to the article.
SunTrust was also found to have lacked adequate oversight procedures relating
to the UIT and CEF transactions.
SunTrust did not comment on the charges, but consented to the entry of
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