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

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

The suit, filed in Tennessee, claims that several of Morgan Keegan‘s funds were invested in collaterized debt obligations (CDOs) that were backed by subprime mortgages. The lawsuit, like many others related to subprime debt obligations, claims investors who vested in the funds were not made aware of the fund’s full exposure to the risky loans until the loans faced greater deterioration in late 2007.

The Morgan Keegan lawsuit claims, “the funds lacked adequate controls and hedges to minimize the risk of loss from mortgage delinquencies which affected a large part of their portfolios.” The plaintiffs also say “the funds’ portfolios were materially misstated due to their failure to properly value CDOs; and the extent of the funds’ risk exposure to mortgage-backed assets was misstated.”

SOURCE: Morgan Keegan Investment Fraud › Subprime Mess at Morgan Keegan