Georgia Foundation Sues Bank Over Risky Investment

A suburban Atlanta foundation is suing SunTrust Bank for allegedly failing to properly disclose the risk when it invested $8-million of the grant maker’s money in a complex type of security, reports The Atlanta Journal-Constitution.

According to the suit, SunTrust placed the Hudgens Family Foundation funds in auction-rate securities in 2005, characterizing them as a safe, conservative investment. The market for the securities dried up during the global financial crunch, making it virtually impossible to sell such holdings and locking the money into an account that takes 35 years to mature, according a foundation lawyer.

SunTrust has denied any wrongdoing, saying it “handled this account appropriately.” The investment represents more than a quarter of the assets of the foundation, which was established by Scott Hudgens, a Georgia developer and philanthropist who died in 2000.