SunTrust 2011 Annual Report Download - page 208
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Please find page 208 of the 2011 SunTrust annual report below. You can navigate through the pages in the report by either clicking on the pages listed below, or by using the keyword search tool below to find specific information within the annual report.Notes to Consolidated Financial Statements (Continued)
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Putative ERISA Class Actions
Company Stock Class Action
Beginning in July 2008, the Company, officers and directors of the Company, and certain other Company employees were named
in a putative class action alleging that they breached their fiduciary duties under ERISA by offering the Company's common stock
as an investment option in the SunTrust Banks, Inc. 401(k) Plan (the “Plan”). The plaintiffs purport to represent all current and
former Plan participants who held the Company stock in their Plan accounts from May 2007 to the present and seek to recover
alleged losses these participants supposedly incurred as a result of their investment in Company stock.
The Company Stock Class Action was originally filed in the U.S. District Court for the Southern District of Florida, but was
transferred to the U.S. District Court for the Northern District of Georgia, Atlanta Division, (the “District Court”) in November
2008.
On October 26, 2009, an amended complaint was filed. On December 9, 2009, defendants filed a motion to dismiss the amended
complaint. On October 25, 2010, the District Court granted in part and denied in part defendants' motion to dismiss the amended
complaint. Defendants and plaintiffs filed separate motions for the District Court to certify its October 25, 2010 order for immediate
interlocutory appeal. On January 3, 2011, the District Court granted both motions.
On January 13, 2011, defendants and plaintiffs filed separate petitions seeking permission to pursue interlocutory appeals with
the U.S. Court of Appeals for the Eleventh Circuit (“the Circuit Court”). On April 14, 2011, the Circuit Court granted defendants
and plaintiffs permission to pursue interlocutory review in separate appeals. On September 6, 2011, briefing in the separate appeals
concluded. The Circuit Court has not set a date for oral arguments.
Mutual Funds Class Action
On March 11, 2011, the Company, officers and directors of the Company, and certain other Company employees were named in
a putative class action alleging that they breached their fiduciary duties under ERISA by offering certain STI Classic Mutual Funds
as investment options in the Plan. The plaintiff purports to represent all current and former Plan participants who held the STI
Classic Mutual Funds in their Plan accounts from April 2002 through December 2010 and seeks to recover alleged losses these
Plan participants supposedly incurred as a result of their investment in the STI Classic Mutual Funds.
The Affiliated Funds Class Action is pending in the U.S. District Court for the Northern District of Georgia, Atlanta Division (the
“District Court”). On June 6, 2011, plaintiff filed an amended complaint. On June 20, 2011, defendants filed a motion to dismiss
the amended complaint. On July 25, 2011, briefing on the motion to dismiss concluded, and the motion remains pending.
Metropolitan Bank Group, Inc. v. SunTrust Robinson Humphrey, Inc.
On March 8, 2011, SunTrust Robinson Humphrey (“STRH”) was served with a notice of claim initiating a FINRA arbitration
against the Company and one employee by Metropolitan Bank Group, Inc. In this case, the plaintiff alleges that it purchased
approximately $80 million in preferred securities through STRH on which it suffered significant losses. The plaintiff alleges that
it subsequently was informed by its primary regulator that it was not permitted to own certain of these securities and that STRH
was or should have been aware of that fact. The plaintiff also alleges that certain of the securities in question were not suitable for
it because they were too risky. The plaintiff has asserted causes of action for negligence, breach of fiduciary duty, and violation
of FINRA rules. The arbitration hearing in this case is scheduled for May 2012.
SunTrust Mortgage Reinsurance Class Actions
STM and Twin Rivers Insurance Company ("Twin Rivers") have been named as defendants in two putative class actions alleging
that the companies entered into illegal “captive reinsurance” arrangements with private mortgage insurers. More specifically,
plaintiffs allege that SunTrust’s selection of private mortgage insurers who agree to reinsure loans referred to them by SunTrust
with Twin Rivers results in illegal “kickbacks” in the form of the insurance premiums paid to Twin Rivers. Plaintiffs contend that
this arrangement violates the Real Estate Settlement Procedures Act (“RESPA”) and results in unjust enrichment to the detriment
of borrowers. The first of these cases, Thurmond, Christopher, et al. v. SunTrust Banks, Inc. et al., was filed in February 2011 in
the U.S. District Court for the Eastern District of Pennsylvania. This case currently has been stayed by the Court pending the
outcome of Edwards v. First American Financial Corporation, a captive reinsurance case currently pending before the U.S.
Supreme Court. The second of these cases, Acosta, Lemuel & Maria Ventrella et al. v. SunTrust Bank, SunTrust Mortgage, Inc.,
et al., was filed in the U.S. District Court for the Central District of California in December 2011. The Company intends to seek
to have this case stayed pending a decision in the Edwards case also.