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

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

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

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 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

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