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.

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