SunTrust Sues To Block FINRA Arbitration In MBS Row

Law360, New York (February 7, 2013, 8:47 PM EST) -- SunTrust Banks Inc. sued a Connecticut hedge fund in New York federal court Wednesday in hopes of derailing arbitration before the Financial Industry Regulatory Authority over allegedly shoddy mortgage-backed securities, saying the lack of a seller-customer relationship shields it from alternative dispute resolution.

Georgia-based SunTrust acknowledges one of its units underwrote the $16 million offering but argues that now-defunct Turnberry Capital Management LP isn’t a customer entitled to FINRA arbitration because it purchased the securities from broker Raymond James & Associates Inc.

Turnberry has no arbitration...
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