In his 27-page opinion, U.S. District Judge S. James Otero disagreed with Morgan Keegan, and sided with the Financial Industry Regulatory Authority (FINRA), which is acting as arbitrator in these cases. According to a report in the Memphis Daily News, the judge said Morgan Keegan – which is based in Memphis – did not have sufficient grounds to challenge the award, which was presented in September 2009 and reported on this blog.

Grant’s case is one of many filed against Regions Morgan Keegan. The lawsuits allege Morgan Keegan brokers misrepresented a number of its funds as low-risk, when the funds were actually tied to the volatile subprime mortgage market. When the real estate market crashed, the funds lost up to 80 percent of their value, almost overnight.

Court documents reveal that during a discussion of the case during a break, arbitrators said, among other things, “This fund – these funds were a sucker play,” according to the news report.

SOURCE: Morgan Keegan Investment Fraud › Judge upholds $1.4 million award for Morgan Keegan investment loss

The administrative action is the culmination of a multi-state investigation involving six mutual funds sold by Morgan Keegan broker dealers to approximately 13,000 customers. Those six mutual funds lost approximately $2 billion in value from March 31, 2007 to March 31, 2008.

The states of Mississippi, Alabama, Kentucky and South Carolina, along with the Securities Exchange Commission (SEC) and the Financial Industry Regulatory Authority (FINRA) announced administrative actions against Morgan Keegan, which is based in Memphis, Tenn., on April 7.

The Joint Administrative hearing includes Mississippi, Alabama, South Carolina and Kentucky, and will be held at the offices of the Alabama Securities Commission in Montgomery, Ala., on Tuesday, Oct. 5, 2010 beginning at 9 a.m. CST. The hearing was requested by attorneys representing Morgan Keegan, Morgan Asset Management, James C. Kelsoe, Jr., Brian B. Sullivan, Gary S. Stringer and Michele F. Wood as Respondents.

SOURCE: Morgan Keegan Investment Fraud › Morgan Keegan hearing set for October in Montgomery, Ala.

According to the Business Journal report, CSG has filed suit in Shelby County Circuit Court, naming as defendants Morgan Keegan, Morgan Asset Management, Regions Financial Corp., and James Kelsoe Jr., who was at one time manger of the funds held by CSG. The paper says the company is alleging such illegal activities as misrepresentation and suppression, fraudulent concealment, breach of fiduciary duty, intentional interference with business relationships and “negligent supervision and conspiracy” involving the Regions Morgan Keegan funds.

Regions Morgan Keegan has been under fire for mismanagement and misrepresentation of several of its investment funds since 2008, when clients began crying “foul” after taking significant losses in funds sold to them as “low risk.” According to the many lawsuits filed on behalf of RMK investors, the funds were presented to them as low risk but were actually tied to the volatile mortgage market. When the housing industry collapsed, the funds were significantly devalued, almost overnight.

Funds included in the CSG lawsuit include the Regions Morgan Keegan Select High Income Fund, the Regions Morgan Keegan Select Intermediate Bond Fund, RMK High Income Fund Inc., RMK Strategic Income Fund Inc., RMK Advantage Income Fund Inc. and the RMK Multi-Sector Fund Inc.

Arbitration of pending lawsuits against Regions Morgan Keegan is being handled by the Financial Industry Regulatory Authority (FINRA). According to the Business Journal, arbitration panels have heard 78 cases to date.

SOURCE: Morgan Keegan Investment Fraud › CSG files lawsuit against Morgan Keegan alleging investment fraud

The Reuter’s piece says that despite the pledge, Ritter “dismissed the idea” of unloading Morgan Keegan. The bank suffered when its investment arm, headquartered in Memphis, Tenn., was the target of numerous lawsuits claiming misrepresentation of funds. Thousands of investors sued Regions Morgan Keegan, claiming certain investment funds were represented as low risk, when they were in fact tied to the high-risk mortgage bond market. When the bottom fell out of the housing market, many investors – which include individuals as well as companies and organizations – lost the majority of their money almost overnight.

A similar report in the Wall Street Journal says Ritter is open to “finding a partner for brokerage subsidiary Morgan Keegan & Co.” The question was posed during the recent Goldman Sachs & Co. U.S. Financial Services Conference in New York. According to the WSJ, while Ritter emphasized that he still feels Morgan Keegan is of “strategic importance” to Regions, he also vowed to stay open to any possibilities, and suggested a joint-venture for the brokerage would be appealing.

Arbitration of pending lawsuits against Regions Morgan Keegan is being handled by the Financial Industry Regulatory Authority (FINRA), and most settlements to date have gone in favor of the Plaintiffs. There are many lawsuits still currently pending.

SOURCE: Morgan Keegan Investment Fraud › Regions Financial eyes ‘any and all’ options to raise capital

There are numerous lawsuits currently pending against Birmingham, Ala.-based Regions Financial Corp.’s Memphis-based Morgan Keegan unit. Lawsuits filed on behalf of investors allege the RMK investment funds were misrepresented as low-risk, high-yield funds, when in fact they were tied to the volatile mortgage lending industry. As a result, when that industry faltered, investors lost up to 80 percent or more of their investments, almost overnight.

Unlike some other market investors, those who invest in bond funds generally choose them because they are relatively safe investments – or they should be. The typical investor is someone who is building a fund for retirement, close to retirement, building a college fund, or an organization that has invested operating capital. These investors are looking for slow, steady growth without much risk.

According to the U.S. News report, FINRA statistics reveal that through August, the organization has received 4,991 new dispute-resolution cases to date this year, which is an increase of 65 percent over 2008. Also, 1,173 of this year’s cases involved mutual funds, compared to 935 that invoved common stocks. The three most common charges FINRA is seeing in these cases are breach of fiduciary duty, misrepresentation, and negligence.

And, investors are getting relief in the majority of arbitration settlements, according to the news report. FINRA reports that 42 percent of cases that went to arbitration in 2008 resulted in compensation for investors. However, when prearbitration settlements are taken into account, that number is even higher, with 72 percent of total cases resulting in a win for the investor.

SOURCE: Morgan Keegan Investment Fraud › FINRA statistics show uptick in bond fund lawsuits

FINRA is the money management industry’s regulatory organization, and is overseeing hundreds of arbitration complaints from investors.

Recently, Morgan Keegan made a surprising decision to appeal three of the arbitration judgments, which had been decided by FINRA in favor of the investors. Those cases are now tied up in further litigation. Other suits are still pending review.

SOURCE: Morgan Keegan Investment Fraud › FINRA awards $1.4 million to NBA star for Regions Morgan Keegan losses

Morgan Keegan is owned by Birmingham, Ala. based Regions Financial Corp. The regional brokerage has been beset by lawsuits since 2007, when investors suffered huge losses and alleged the investment brokerage had misrepresented several funds as “safe,” when they were in fact high-risk investments tied to the mortgage bond market.

Regions Morgan Keegan is asking the court to vacate three arbitration awards totaling just over $1 million. Morgan Keegan filed its motions to vacate in a Birmingham, Ala. court. Clients affected by this recent development include a ministry that distributes free Bibles and religious books to prisoners and their families.

The appeal will delay resolution for the affected clients whose lawsuits are now once again pending, and will also cost the shareholders of Regions Financial Corp., who are on the hook for legal fees and other costs of the delay. It is estimated the appeal could drag the case out for as long as another two years.

SOURCE: Morgan Keegan Investment Fraud › Morgan Keegan appeals hit Regions shareholders in the pocketbook

SOURCE: Morgan Keegan Investment Fraud › RMK losses still piling up in arbitration rulings

Regions Financial Corp.

According to the report, the drop is tied to more losses in arbitration cases related to its Morgan Keegan bond fund unit, which lost $2 billion in risky asset-backed securities. Investors are suing Regions Morgan Keegan, alleging the investments were misrepresented as “safe” funds, when they were in fact tied to the volatile mortgage lending industry. When the industry went bust, investors lost up to 80 percent of their savings, practically overnight.

So far, the Financial Industry Regulatory Authority (FINRA), which is overseeing arbitration of these claims, has sided with investors every time, awarding nearly $2 million in damages to date. Recent judgments include $285,000 to a Vietnam Veteran in Mississippi, and nearly $1 million to former NFL star Jerome Woods, Market Watch reports.

SOURCE: Morgan Keegan Investment Fraud › Regions stock drops in light of arbitration losses

This week, Morgan Keegan & Co., a subsidiary of Regions Financial Corp., was ordered to pay $950,000 to investor Jerome Woods, whose claim included allegations of fraud, negligence and a breach of fiduciary duty by Morgan Keegan. Woods  is a former NFL defensive back, playing for the Kansas City Chiefs from 1996-2005.

According to a report in the Investment News, Woods was involved in four RMK investment funds: The RMK High-Income Fund, the RMK Advantage Fund, the RMK Strategic Income Fund and the RMK Multi-Sector High Income Fund.

Arbitrators have awarded RMK investors more than $1.6 million to date.

SOURCE: Morgan Keegan Investment Fraud › Investors, 6 Morgan Keegan, 0

Regions Morgan Keegan is defending hundreds of arbitration lawsuits regarding the funds, which were backed by risky mortgage-related assets. Investors allege the funds were represented as low-risk securities, but when the mortgage crisis hit beginning in the middle of 2007, the funds suffered staggering and sudden losses. Some funds dropped between 62 and 82 percent almost overnight.

After Hyperion aquired the RMK funds, several of them were rebranded under the Helios name. Funds set for liquidation are Helios Select High Income (HIFAX), Helios Select Intermediate Bond (HSIBX) and Helios Select Short Term Bond (MSBIX).

Source: Morningstar Fund Times

SOURCE: Morgan Keegan Investment Fraud › Helios bond funds set for liquidation

Hundreds of investors lost significant amounts of money nearly overnight as a result of monies invested in mortgage-backed funds that collapsed in the subprime lending crisis. Lawsuits against Regions Morgan Keegan allege the funds were represented to investors as low-risk preferred stocks and corporate bonds, when in fact they were some of the most risky investments available.

According to the CNNMoney report, this is the fifth straight Financial Industry Regulatory Authority (FINRA) arbitration award against Morgan Keegan for these proprietary bond funds. Previous award have included $50,000 to an Alabama retiree who lost his savings, and $187,000 to compensate a farmer with losses of $100,000 in the funds.

The most recent verdict sets a precedent for remaining pending arbitration lawsuits against the company.

SOURCE: Morgan Keegan Investment Fraud › RMK investor awarded more than $250,000 to cover bad fund losses

The Memphis native best known for his Major League career with the St. Louis Cardinals wanted to work with his hometown brokerage firm when he selected Morgan Keegan – based in Memphis and owned as a subsidiary of Birmingham, Ala. based Regions Financial Corp. – for his investments, the News says. However, his funds were placed in high-risk funds, resulting in unusually fast and severe losses.

The troubled funds were shifted to Hyperion Brookfield Asset Management in the summer of 2008, and the company has rebranded the funds under the Helios name.

Although McCarver received much less than his reported losses, the News quotes him as being happy with the result of the case, saying, “Morgan Keegan was found liable. I am delighted.”

SOURCE: Morgan Keegan Investment Fraud › McCarver gets $100,000 in RMK claim

The deal is pending approval by Regions shareholders, but if approved will remove the financial company from the mutual funds business entirely, according to the Journal.

This news follows on the heels of other efforts by Regions to divest itself of investment funds following a series of lawsuits filed last year by investors who claimed RMK investment funds had been misrepresented. The suits allege investment portfolios were presented as low risk, when in actuality they were tied to the high-risk subprime mortgage market. Investors suffered steep and immediate losses as a result.

Just a few months ago, Regions transferred management of a group of its bond funds from Morgan Keegan to Hyperion-Brookfield Asset Managment, Inc., and most of those funds changed to the brand name Helio to reflect the new brand name. Six of those funds also received new trading symbols.

According to the Birmingham Business Journal, the transaction with Pioneer involves a separate group of funds than those now managed by Hyperion.

Bloomberg recently reported that Regions Financial Corp. reported a 23-year-low in New York trading after reporting a record $6.24 billion loss. According to the news report, the losses are blamed largely on bad debt resulting from the collapse in the mortgage-lending industry, with a record number of loan defaults and foreclosures.

SOURCE: Morgan Keegan Investment Fraud › Regions selling off RMK Select Funds

Hyperion took over management of the Morgan Keegan investment arm of Regions after several funds suffered steep and sudden drops in value as a result of their connection to the subprime mortgage securities market.

On Dec. 30, the Daily News announced that Hyperion had changed the names of seven former RMK investment funds, now calling them Helios funds, reflecting the change in management, and of course removing the stigma of the RMK investment debacle.

Sales of the Select Short Term Bond Fund shares to new investors will stop effective Jan. 23.

SOURCE: Morgan Keegan Investment Fraud › RMK fund set for liquidation

The Commercial Appeal quotes Marion Hayes, a spokesperson for Hyperion, as saying, “It’s not right for these funds to be named Regions Morgan Keegan funds when they’re managed by us.”

The change affects four closed-end funds and three open-end funds. Hyperion took over management of the Morgan Keegan investment arm from Regions after several funds suffered steep and sudden drops in value as a result of their connection to the subprime mortgage securities market.

Following is a list of the changes:

Former RMK funds:
Helios Advantage Income Fund: From RMA to HAV
Helios High Income Fund: From RMH to HIH
Helios Multi-Sector High Income Fund: From RHY to HMH
Helios Strategic Income Fund: From RSF to HSA

Former Regions-Morgan Keegan Select funds:
Helios Select High Income Fund: From MKHIX to HIFAX
Helios Select Intermediate Income Fund: From MKIBX to HSIBX
Helios Select Short Term Bond Fund: MSBIX, no change

SOURCE: Morgan Keegan Investment Fraud › RMK funds change names to reflect new Helios brand

According to its company web site, Burke Capital Group is an independent investment banking firm that provides “superior corporate finance and mergers and acquisitions advisory services to financial institutions and middle market companies.” The company was founded in 1995. In 2006, the SNL Financial’s Bank M&A Scoreboard listed Burke at No. 1 among the Top Southeast regional financial advisers for the third quarter.

Regions Morgan Keegan has been staggering since late 2007 when it was revealed that a number of its investment funds that were presented as low-risk had actually been tied to the volatile subprime mortgage lending market. When the mortgage industry collapsed, investors found their portfolios devalued literally overnight, resulting in massive losses.

In August, Hyperion Brookfield, based in New York, NY, took over the management of three open-end funds and four closed-end funds that had been managed by Morgan Asset Managment, an arm of Morgan Keegan, which is based in Memphis. Morgan Asset Management is owned by Regions Financial Corp.

SOURCE: Morgan Keegan Investment Fraud › Morgan Keegan buys investment bank

Jaffe placed RMK in the category “Not knowing when to quit,” citing the investment company’s insistence on keeping funds tied to high-risk subprime mortgages active even after they suffered losses topping 80 percent. The columnist already had named RMK’s manager James Kelsoe as the Lump of Coal (Mis)Manager of 2007, when the funds were showing losses of 50 percent, and expresses incredulity that the funds remained in operation despite their plummeting value.

He names two of the funds specifically, RMK’s Select Intermediate Bond fund and Select High Income, which lost, respectively, 80 percent and 85 percent of their value in 2008.

RMK is among  six investors or funds named to the list this week. Jaffe will award more lumps next week, and name the (Mis)Manager of the Year for 2008.

SOURCE: Morgan Keegan Investment Fraud › Financial columnist fills RMK stocking with coal

The Post says McCarver’s broker represented the investment funds as conservative, similar to CDs and bonds, but instead put his money in high-risk funds tied to the mortgage market. When other funds suffered losses topping out around 6 percent, McCarver’s fund dropped between 70 and 90 percent, the paper reports.

It is estimated that industry investor losses in the Regions Morgan Keegan (RMK) funds totaled approximately $2 billion last year.

The Post says McCarver, 67, was looking for safe investments that would be a cushion for his retirement and provide security for his children.

Ironically, McCarver was born in Memphis, Tenn., the home of Morgan Keegan & Co. He played professional baseball for the St. Louis Cardinals, and in 1964 his tiebreaking home run in the 10th inning won Game 5 of the World Series for the team. He would go on to celebrate two World Series championships during his career with the Cardinals. Later in his career, he played for the Phillies, Expos and Red Sox.

He retired from pro ball in 1979 and began his career as a sportscaster. He currently works on the FOX network’s MLB telecasts with partner Joe Buck.

A minor league baseball stadium in Memphis was named after him in 1978, but was replaced by a new downtown stadium in 2000.

SOURCE: Morgan Keegan Investment Fraud › Baseball hero, sportscaster McCarver lost funds to RMK investments

The RMK litigation involves investment funds managed by a branch of Morgan Keegan & Co., which is based in Memphis. Regions Financial Corp., headquartered in Birmingham, owns Morgan Asset Management, an arm of Morgan Keegan.

According to suits filed on behalf of plaintiffs in these cases, seven RMK investment funds took a nose dive because of their ties to the subprime mortgage lending crisis, and stockholders found themselves holding greatly devalued portfolios. Because the funds had been initially represented as low-risk, when in actuality they were tied to the volatile subprime lending market, stockholders are bringing suit against Regions Morgan Keegan for their losses.

According to the Daily News story, Judge Mays considered five putative class actions that were filed in the local federal court, and two motions to consolidate. The paper reports the judge’s ruling states actions that were included in the motions for consolidation “share both factual and legal issues, arise from the same facts, raise similar legal claims and name substantially the same defendants.”

Judge Mays has not yet named a lead plaintiff in the consolidation. He ruled out one group that had petitioned for the spot as being too large, with 19 individual and institutional investors, according to the Daily Times.

There are many individual claims still pending across the country in this matter.

SOURCE: Morgan Keegan Investment Fraud › RMK lawsuits may be consolidated in Tennessee

Hyperion is working to reposition and revamp the funds, which faltered badly as a result of ties to subprime mortgage lending. It is estimated that investors, who were promised low-risk funds but were instead placed into high-risk securities, suffered losses up to 90 percent of the value of their funds when the mortgage lending crisis caused value of the funds to plummet.

According to the Commercial Appeal, the new fund managers are beginning by evaluating each portfolio individually, and trying to determine whether there is any chance the fund in question could rebound. Hyperion will then work to secure better investments for the funds, hoping to see an improvement when the overall economy improves.

Hyperion fund managers have cut dividends for all seven funds, while purchasing promising high-yield corporate bonds, with a goal of improving the long-term financial picture by developing capital growth, according to the Commercial Appeal.

SOURCE: Morgan Keegan Investment Fraud › New MK fund managers tight-lipped

According to a report in the Memphis Commercial Appeal, Hyperion Brookfield, based in New York, NY, took over the management of three open-end funds and four closed-end funds that had been managed by Morgan Asset Managment, an arm of Morgan Keegan, which is based in Memphis. Morgan Asset Management is owned by Regions Financial Corp., based in Birmingham, Ala.

The Commercial Appeal reports that Hyperion investors will reposition the funds and revamp the portfolios in an effort to revive them. New investments will focus on investment grade corporates and high-yield securities, according to Dana Erikson, who is now portfolio manager, the Appeal says.

Hyperion Brookfield has scheduled a conference call for shareholders on Sept. 4 to discuss specific plans of the portfolio restructuring.

SOURCE: Morgan Keegan Investment Fraud › MK funds get new asset manager

The housing market’s decline is affecting the bottom line at banks nationwide, but the situation has dealt Regions a double-whammy in the shape of fallout from its Morgan Keegan mutual fund investments. The financial giant is facing a number of lawsuits with investors saying they were promised low-risk funds but were instead invested in funds based on risky subprime mortgages. Investors are claiming losses of up to 53 percent.

Now, financial analysts are advising Regions to conserve capital by eliminating dividends that would normally be paid to stockholders, cutting off a source of income for thousands of stockholders, The News reports.

The situation is made even gloomier because stockholders expected 2008 to be a banner year as the result of the November 2006 merger of Regions with AmSouth. The merger combined two of the largest banks in the state and gave Regions Financial Corp. a 16-state reach.

Although the bank is considered well-capitalized and financially sound, Regions’ loan loss fund has grown to $1.4 billion, which is 1.49 percent of net loans, The News reports. This is an increase from 1.45 percent in 2007, which the News says analysts consider a significant jump.

SOURCE: Morgan Keegan Investment Fraud › Regions hit by double whammy

Currently, the News reports, Regions’ 38-cent quarterly dividend yields around 11 percent. The paper said banks are reducing dividends across the industry, largely due to the crisis in the housing market, as losses from home loans continue to climb.

SOURCE: Morgan Keegan Investment Fraud › Predicted Regions dividend drop

According to the filing, the claim is based on alleged misrepresentation and omission of material information in the identified Funds’ registration statements and prospectus releases with regard to the nature, and the extent of the Funds’ investments in collateralized debt obligations (CDSs), together with the resulting exposure to the sub prime mortgage market.

The claim alleges further damages stemming from alleged false and misleading statements issued by Morgan Keegan with regard to the Funds’ safety, and capacity for generating income.

SOURCE: Morgan Keegan Investment Fraud › $4 Million Claim

According to the report, Morgan Keegan directed the farmer-owned co-op toward a $10 million investment in mortgage-backed securities, including subprime.

CountryMark purchased the note on Aug. 10, 2007. Seven days later, ratings agencies downgraded the A+-rated investment to junk status and it remains in default.

CountryMark is suing Memphis-based Morgan Keegan, a division of Alabama-based Regions Financial Corp., to recover the purchase price, interest and attorney’s fees. In the suit, filed in U.S. District Court in Indianapolis, the company says Morgan Keegan failed to disclose the investment was substantially backed by subprime and midprime mortgages–a risky bet that ran counter to the group’s investment objective. Financial institutions nationwide have written off more than $100 billion such investments, and many more writedowns are expected.

“We have been let down by Morgan Keegan in so many ways,” Charlie Smith, CountryMark’s CEO, said in a statement.

A spokeswoman for Morgan Keegan says the company was merely a middleman in the transaction, selling a “Golden Key” security underwritten by Merrill Lynch.

“The commercial paper at issue in this suit had the highest available commercial paper rating ‘A-1+’ by Standard & Poor’s,” said Kathy Ridley, in an e-mailed statement. “Morgan Keegan acted only as a distributor in this transaction, buying the securities from Merrill Lynch, who was the underwriter, and then reselling them to CountryMark. Shortly after the sale this issue defaulted, a rare and unexpected occurrence with such a highly rated issue.”

CountryMark isn’t the only local company to feel stung by investment advice from Morgan Keegan. The Indiana Children’s Wish Fund, which grants wishes for terminally ill children, lost about $48,000 after a Morgan Keegan adviser suggested the group invest $223,000 in an intermediate-bond fund in June 2007.

The fund, which included mortgage-related securities, fell 22 percent before the Wish Fund yanked its investment. The Wish Fund eventually recovered its loss after filing an arbitration claim.

SOURCE: Morgan Keegan Investment Fraud › CountryMark Losses

The suit, filed in Tennessee, claims that several of Morgan Keegan’s funds were invested in collaterized debt obligations (CDOs) that were backed by subprime mortgages. The lawsuit, like many others related to subprime debt obligations, claims investors who vested in the funds were not made aware of the fund’s full exposure to the risky loans until the loans faced greater deterioration in late 2007.

The Morgan Keegan lawsuit claims, “the funds lacked adequate controls and hedges to minimize the risk of loss from mortgage delinquencies which affected a large part of their portfolios.” The plaintiffs also say “the funds’ portfolios were materially misstated due to their failure to properly value CDOs; and the extent of the funds’ risk exposure to mortgage-backed assets was misstated.”

SOURCE: Morgan Keegan Investment Fraud › Subprime Mess at Morgan Keegan