Beasley, Allen, Crow, Methvin, Portis & Miles, P.C.

Morgan Keegan & Co. Inc., an investment brokerage owned by Regions Financial Corp., has announced a $200 million settlement in relation to charges of consumer fraud stemming from investments tied to the mortgage bond market. The company has been battling numerous lawsuits brought on behalf of clients that allege Morgan Keegan falsely represented proprietary mutual funds as “low risk” investments when they were actually tied to the volatile mortgage market.

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A recent report in the Memphis Business Journal says the relationship between Regions Financial Corp., based in Birmingham, Ala., and its investment arm, Morgan Keegan & Co., located in Memphis, Tenn., has sweetened. At a recent “Investor Day” event held in New York City, the Business Journal reports company executives talked about strengthening the relationship between the two organizations, and Regions heads included Morgan Keegan as part of the company’s “strategic future.” Last December, and as recently as March of this year, there were rumors that Regions was planning to unload the investment brokerage in order to raise capital to pay back its Troubled Asset Relief Program (TARP) loans, and to distance itself from lawsuits aimed at alleged fraudulent investments made by Morgan Keegan.

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Yesterday a judge upheld the decision made last fall that holds Morgan Keegan responsible for a $1.4 million loss by investor Horace Grant. The retired Chicago Bulls basketball star sued Regions Morgan Keegan for losses resulting from his investments in mutual funds recommended by the financial management company. Morgan Keegan appealed the decision, saying arbitrators had already made up their minds against the investment company when they heard the case.

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An administrative hearing to discuss allegations of fraud against Morgan Keegan & Co. has been set for October 5, 2010, in Montgomery, Ala. Morgan Keegan is owned by Regions Financial Corp., based in Birmingham, Ala. Numerous lawsuits have been filed against the company, alleging it misrepresented high-risk funds tied to the volatile mortgage bond markets as “safe” or low-risk investments.  As a result, lawsuits allege investors lost huge portions of their funds almost overnight. It is estimated that losses may top $2 billion.

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A recent report in the Memphis Business Journal says Consulting Services Group LLC (CSG) is the latest company to file suit against Morgan Keegan & Co., alleging illegal actions resulting in significant losses in its investments in several Morgan Keegan funds. CSG, based in Memphis, provides investment services for foundations, endowments, public funds, trust companies and high-net worth individuals.

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A report by Reuters news service says Regions Financial Corp. CEO Dowd Ritter is open to “any and all” possibilities to raise capital in order to repay the U.S. goverment for the bailout money it loaned the institution. Regions, based in Birmingham, Ala., received $3.5 million in Troubled Asset Relief Program (TARP) funds. However, despite this pledge, it is unclear that Region’s brokerage arm, Morgan Keegan, is on the table.

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According to a report in U.S. News & World Report, recent statistics released by the Financial Industry Regulatory Authority (FINRA), the organization that handles almost all securities arbitration, including claims by Regions Morgan Keegan investors, show there has been a notable increase in the number of filings. In particular, the organization is seeing an increase in claims involving bond funds, which are represented as generally secure investments.

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On Friday, the Financial Industry Regulatory Authority (FINRA) awarded $1.4 milion to ex-Chicago Bulls star Horace Grant as compensation for losses the NBA star suffered as a result of investments in Regions Morgan Keegan bond funds. There are numerous lawsuits pending against the financial management company as a result of the funds, which investors allege were represented as low-risk, but which were actually tied to the volatile subprime mortgage market. When the market crashed, investors lost up to 80 percent of their investment, almost overnight.

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.

In an unusual move recently, Morgan Keegan & Co. has filed for appeal on three rulings handed down by arbitration panels against the company. This development was reported today by the Wall Street Journal / Dow Jones Newswires. In most cases of arbitration, awards are usually binding, with parties only allowed to appeal when arbitrators clearly ignore established laws.

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A recent news release published on the Class Action Newsline reports Regions Morgan Keegan has suffered another defeat at the hands of a FINRA arbitration panel in Boca Raton, Fla., which awarded $431,000 to plaintiff Philip Richardson for his losses in RMK investment funds. This is the latest in a string of judgments against Regions Financial Corp.’s Memphis-based Morgan Keegan unit.

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