According to a report in the Memphis Daily News, more than 300,000 investors lost over a billion dollars when the subprime mortgage meltdown drained the funds seemingly overnight. Morgan Keegan has been plagued with litigation and arbitration claims from investors throughout the country. The bulk of arbitration claims reviewed by the Financial Industry Regulatory Authority (FINRA) have gone in favor of the investors.

The settlement will include the Securities and Exchange Commission (SEC), FINRA and the states that participated in the civil fraud investigation into Morgan Keegan investment firm – Alabama, Kentucky, Mississippi, South Carolina and Tennessee. Funds will be distributed to investors who lost money after an administrator identifies and evaluates their claims. The funds will be available to investors in any state, not only the five who participated in the settlement.

On the heels of the settlement announcement, the head of Regions Financial Corp. announced the company would begin to look at options for its investment portfolio, which may include the sale of the Morgan Keegan investment arm.

SOURCE: Morgan Keegan Investment Fraud › Regions eyes Morgan Keegan sale as investment arm settles Fraud claims

Regions is struggling under a second quarter reported loss of $335 million, and some watching the industry felt the company would be unable to absorb more losses and legal fees related to the Morgan Keegan lawsuits. As a result of the litigation, which involves proprietary Regions Morgan Keegan investment funds, Morgan Keegan racked up $161 million in legal fees last year, a jump of 44 percent over the previous year. The lawsuits allege the Regions Morgan Keegan funds were presented to investors as low-risk, but were actually tied to the volatile mortgage lending market. When the bottom fell out of that sector, many investors lost substantial amounts, almost overnight.

However, Regions and Morgan Keegan have recently partnered on a new investment banking division that more closely ties the financial institution with the investment brokerage. It is believed that this new relationship is already proving profitable by allowing Regions to leverage existing relationships with investment banking clients, the Business Journal reports.

An administrative hearing to discuss allegations of fraud against Morgan Keegan & Co. has been set for Oct. 5 in Montgomery, Ala. 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. The six mutual funds lost approximately $2 billion in value from March 31, 2007 to March 31, 2008. 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.

SOURCE: Morgan Keegan Investment Fraud › Regions, Morgan Keegan relationship stronger despite legal woes

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

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

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

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

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