| NEW YORK
NEW YORK May 15 A U.S. appeals court on
Thursday upheld a decision to prevent a defunct
Connecticut-based hedge fund from moving forward with a $13
million arbitration against SunTrust Banks Inc over
The 2nd U.S. Circuit Court of Appeals in New York affirmed a
2013 injunction that prevented Turnberry Capital Management LP
from pursuing a securities arbitration before the Financial
Industry Regulatory Authority.
The ruling came in one of what has become an increasing
number of lawsuits filed by banks challenging the ability of
investors with big monetary claims to have their cases heard
before FINRA, a Wall Street industry-funded
Some plaintiffs asserting large damage claims have come to
prefer FINRA over courts to hear their cases, in part because
they view arbitration as quicker.
SunTrust brought the lawsuit in February 2013 to enjoin an
arbitration Turnberry launched to recover $13 million plus
interest it claimed to have lost on a 2007 investment in
The securities were issued by SunTrust. Turnberry, which
ceased business in 2008, bought them from broker Raymond James
In May 2013, U.S. District Judge Naomi Reice Buchwald held
that under FINRA rules, Turnberry was not a "customer" of
SunTrust. The judge said Raymond James rather than SunTrust
provided the hedge fund investment services and sold the
Turnberry on appeal argued Buchwald had defined a "customer"
too narrowly by requiring it to directly receive goods or
services from SunTrust.
The 2nd Circuit on Thursday said it was "not persuaded by
Turnberry's characterization of the district court's decision."
Kevin O'Brien, a lawyer for Turnberry, said he was
"obviously disappointed" and said the hedge fund would now
arbitrate its case against Raymond James.
Representatives for SunTrust and Raymond James declined
The case is SunTrust Banks Inc, et al, v Turnberry Capital
Management LP, 2nd U.S. Circuit Court of Appeals, No. 13-2075.
(Reporting by Nate Raymond in New York; Editing by Sofina