SEC: SunTrust pays $1.1 million for steering clients to costly funds


SEC: SunTrust pays $1.1 million for steering clients to costly funds

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SunTrust Banks’ Atlanta headquarters. (AP Photo/John Bazemore)

SunTrust Banks agreed to pay a $1.1 million penalty after a federal agency accused the Atlanta-based bank of steering investors to more costly mutual funds and pocketing part of the money.

The federal Securities and Exchange Commission said SunTrust betrayed its clients by selling them mutual fund shares that charge extra fees, called 12b-1 fees, when cheaper share classes were available for the same mutual funds that didn’t charge the fees.

The bank then collected bigger commissions that were paid from those fees, the SEC said.

The agency’s Atlanta regional office said it discovered the practice, which affected more than 4,500 accounts, during a 2015 examination of the bank’s operations.

“SunTrust made self-serving investment recommendations to the detriment of everyday investors who rely on mutual funds to secure their financial futures,” said Aaron W. Lipson, with the SEC’s Atlanta office.

SunTrust didn’t admit or deny the SEC’s charges. The agency said SunTrust agreed to pay a $1.1 million penalty, and also refunded the fees to clients after the SEC began its investigation.

A SunTrust spokesperson said the bank took corrective actions but believes its disclosures were adequate.

“We addressed the matter on a prospective basis with remedial actions starting in the summer of 2015,” said Sue Mallino, with SunTrust. “Although we believe that our disclosures were in accordance with industry standards, we cooperated fully with the SEC and are pleased to have settled this matter.”


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