SunTrust Avoids FINRA Arbitration Concerning The Sale of RMBS

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On May 16, Judge Naomi Reice Buchwald of the United States District Court for the Southern District of New York granted a permanent injunction against hedge fund Turnberry Capital Management LP (Turnberry) in its attempt to compel a FINRA proceeding against SunTrust Banks Inc. (SunTrust). Judge Buchwald held that because Turnberry did not purchase the RMBS at issue from SunTrust, it was not a customer of the SunTrust unit that underwrote the securities and therefore could not compel SunTrust to arbitrate. Turnberry had purchased the securities at issue from the brokerage firm Raymond James & Associates, Inc. Decision.