SEC fines SunTrust for recommending higher-cost fund shares

The Securities and Exchange Commission has charged a unit of SunTrust Banks with improperly recommending more expensive share classes of various mutual funds when cheaper shares of the same funds were available, costing investors more than $1.1 million in avoidable fees. SunTrust Investment Services has agreed to pay a penalty of more than $1.1 million to settle the charges, the SEC said in a release, noting that SunTrust began refunding the overcharged fees plus interest to more than 4,500 affected client accounts after the SEC started its investigation. SEC examiners cited the practice during a compliance review of the firm in mid-2015. According to the SEC's order, the Atlanta-based firm breached its fiduciary duty to act in clients' best interests by recommending and purchasing costlier mutual fund share classes that charge 12b-1 fees. Investors were not informed that they were eligible for less costly share class options that did not charge those fees, which flowed back to SunTrust in the form of higher commissions from the funds.