In 2009, SunTrust Banks, Inc. and SunTrust Robinson Humphrey, Inc. became ensnarled in one of the first auction rate securities (ARS) fraud class action lawsuits. The lawsuit also represented one of the biggest such cases outside of the Southern District of New York. With representation by Sutherland’s highly experienced team of litigators, the Federal District Court in Atlanta not only found in favor of SunTrust and dismissed the case on all counts, but also denied leave to amend, closing the case file completely.
The suit, Case No. 1:08-cv-01287-TWT, alleged that SunTrust failed to disclose the nature of ARS investments and markets established to auction these investments. It was filed by two plaintiffs on behalf of themselves and other investors who purchased ARS from SunTrust from April 1, 2003, through Feb. 13, 2008. The Court found the plaintiffs’ allegations to be without basis. “The Plaintiffs’ allegations about manipulative auction practices do not meet the heightened pleading requirements applicable to securities fraud cases,” wrote U.S. District Judge Thomas W. Thrash, Jr., in his ruling.