Reuters – SunTrust Banks Inc sued a Connecticut-based hedge fund on Wednesday to block arbitration of a $13 million dispute over mortgage-backed securities.
The lawsuit, filed in U.S. district court in Manhattan, is the latest one brought by a bank to challenge claims by investors that their disputes can be heard and decided by a Financial Industry Regulatory Authority arbitration panel.
FINRA, a Wall Street industry-funded watchdog that runs arbitrations where investor disputes with brokerage firms are often heard, has been increasingly receptive to large arbitrations.
The hedge fund, Turnberry Capital Management LP, filed the arbitration in November to recoup $13 million plus interest that it said it lost on a 2007 investment in mortgage-backed securities, according to a statement of claim filed with FINRA that was provided by the fund’s lawyer.
