SunTrust Banks Hit with Shareholder Class Action Over Potential $66 Billion Merger

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A proposed class action lawsuit has been filed in Georgia over a potential $66 billion merger between SunTrust Banks, Inc. and BB&T Corporation.

The plaintiff in the case, a SunTrust shareholder, claims the bank and its board of directors filed with the SEC a misleading registration statement in which they failed to disclose material details regarding SunTrust and BB&T’s respective values and financial projections, as well as certain aspects of the proposed sale’s background.

More specifically, the lawsuit argues that the registration statement failed to identify potential conflicts of interest among SunTrust insiders, who the suit says would be the “primary beneficiaries” of the transaction rather than the bank’s public stockholders. Per the case, SunTrust board members and executives stand to receive “unique benefits” from the sale, such as positions in the newly formed company or millions of dollars in golden parachute compensation should they be terminated in connection with the merger.

According to the complaint, SunTrust and its board of directors had a duty to disclose this information to stockholders before recommending that they vote in support of the merger proposition, yet acted “negligently (if not deliberately)” in omitting such details from the public registration statement. From the complaint:

“Absent disclosure of the foregoing material information prior to the stockholder vote on the Proposed Transaction, Plaintiff and the other members of the Class will be unable to make a fully-informed decision on whether to vote in favor of the Proposed Transaction and are thus threatened with irreparable harm warranting the injunctive relief sought herein.”

The suit seeks an injunction requiring that the stockholder vote be postponed until the defendants disclose the required information.