SunTrust vs. Heirs of Conductor Robert Shaw

According to this Daily Report article, SunTrust has won a round in a suit charging trust mismanagement, brought by the son and stepson of the late music conductor Robert Shaw.

This is not just another “failure to diversify” dispute. The stock in question is that of the Coca-Cola Company, an Atlanta institution. And SunTrust's predecessor, The Trust Company of Georgia, was widely regarded as the Coca-Cola bank.

Central to the litigation is SunTrusts’ decades-old relationship with the Coca-Cola Co.—one of its largest and oldest clients—and whether bank executives could be relied on to manage its clients’ trust portfolios impartially, given the bank’s own extensive holdings of Coke stock which date back to the company’s formation.

According to Hitz’s and Shaw’s pleadings, the trusts that SunTrust manages contain more than 68 million shares of Coke stock. In addition, according to Securities and Exchange Commission filings, SunTrust in 2005 held more than 48 million shares of Coke stock worth more than $2 billion. Together, the bank’s corporate and trust holdings total more than 116 million Coke shares, making it among the soft drink company’s largest shareholders.

At stake are millions of dollars in losses sustained by the Sauls trust—which, in 2000, was divided into a number of smaller trusts—as a result of its concentration of Coke stock. Since 1998, Coke stock has plunged in value from its all time high of $88.94 a share to its current price of $48.10 at the close of business Thursday.

The trusts were established byH. Cliff Sauls, a prominent Atlanta physician. Robert Shaw married Sauls' daughter.