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

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

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