Hedge Fund Can't Force Arbitration In MBS Dispute

May 20 2013 | 12:17pm ET

If Turnberry Capital Management wants its $13 million back from SunTrust Banks, it will have to seek it in the courts.

A federal judge in New York sided with SunTrust on Friday, blocking the hedge fund's arbitration claim against the bank. Turnberry, which went under in 2008, is seeking $13 million it lost on mortgage-backed securities issued by SunTrust the year before.

Turnberry wanted the case heard by a Financial Industry Regulatory Authority arbitration panel. But U.S. District Judge Naomi Reice Buchwald ruled that the hedge fund doesn't qualify as a SunTrust customer under FINRA rules.

Instead, it was Raymond James Financial, from which Turnberry bought the securities, that is the customer, as Turnberry "did not receive any other goods or services from SunTrust that would indicate a customer relationship." Turnberry had argued that the "economic reality" was the Raymond James was a mere conduit for selling the MBS.


In Depth

OmniQuest Capital: Why Funds of Hedge Funds Work

Aug 11 2016 | 4:47pm ET

There have been few sectors of the alternative investment universe under as much...

Lifestyle

Kiawah: Island Reversal

Aug 24 2016 | 9:59pm ET

Looking for real estate investments but the typical real estate fare isn’t cutting...

Guest Contributor

Old Hill Partners: Embrace Illiquidity

Aug 9 2016 | 2:39pm ET

The age-old financial concept that higher yields are the result of higher risk and...