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Compliance March 21, 2011
SunTrust Served with 401(k) Suit
A retiree has sued SunTrust Banks, alleging that it favored investment plans operated by SunTrust or its subsidiaries that performed poorly and charged higher fees than plans offered by independent investment companies.
Reported by PLANADVISER staff
According to the Atlanta Journal-Constitution, the suit alleges some of the SunTrust-controlled investment funds charged fees several times higher than comparable funds operated by a prominent third-party investment company. Moreover, the suit says SunTrust’s 401(k) plan controls more than $2 billion in assets, and that as a result, could have negotiated better fees with outside firms.
The suit, which seeks class-action status, named as defendants SunTrust, company president William Rogers, members of the company’s board who served on the compensation committee and the bank’s Trusco Capital Management and RidgeWorth Capital Management subsidiaries, according to the report. Company officials removed funds not tied to SunTrust on the grounds of poor performance, but the suit says the company didn’t remove SunTrust-affiliated offerings for poor returns, and that losses from fees and poor investment performance total tens of millions of dollars.
“We believe the lawsuit to be without merit and we will vigorously defend ourselves,” SunTrust spokesman Mike McCoy said in a statement, according to the Journal-Constitution.
The plaintiff, Barbara Fuller, retired in 2005 after 38 years with SunTrust, according to the suit. She is represented by Alan Perry, an attorney with Page Perry in Dunwoody, Georgia, according to the report.