September 6, 2011

Morgan Keegan & Company Ordered by FINRA to Pay $555,400 in Texas Securities Case Involving Morgan Keegan Proprietary Funds

A FINRA panel in Houston has ordered Morgan Keegan & Company to pay the Claimants of a Texas securities fraud $555,400 in compensatory damages. The Claimants had accused the financial firm of misrepresentation, negligence, vicarious liability, failure to supervise and violating the Texas Securities Act, the Texas Deceptive Trade Practices Act, and NASD Rules.

The securities claim is related to the sale and recommendation of a number of Regions Morgan Keegan proprietary mutual funds that were allegedly touted as diversified, conservative, and low risk despite a supposed higher rate of return:

• Regions Morgan Keegan High Income Fund
• Regions Morgan Keegan Advantage Income Fund
• Regions Morgan Keegan Multi-Sector High Income Fund
• Regions Morgan Keegan Strategic Income Fund

The funds were actually high-risk mortgage-backed securities that were not appropriate for the Claimants.

After a 5-day hearing, the panel found Morgan Keegan liable in the Texas securities case and ordered the financial firm to pay damages to the WCR Family Limited Partnership, as well as a 4% per annum interest on the $550,400 for the period of July 29, 2011 until payment is made in full. The panel did dismiss all claims brought by the Wilhelmina R. Smith Estate.

Morgan Keegan Securities Fraud Cases
For the past couple of years, our Texas stockbroker fraud law firm has been diligently pursuing claims against Morgan Keegan related to their Regions Morgan Funds. The cases came following claims by investors that the financial firm defrauded them by misrepresenting the risk involved in the investments. Investors sustained many of the losses when the subprime mortgage market collapsed.

Over 400 securities claims have been filed over Morgan Keegan’s RMK funds. Already tens of millions of dollars have been awarded to claimants.

Other RMK funds named in the claims include the:

• RMK Select Intermediate Bond Fund
• RMK Select High Income Fund

Earlier this summer, Regions Financial Corp. agreed to pay $210 million to settle more securities allegations that it fraudulently marketed mutual funds with subprime mortgages while artificially raising the prices of the funds. FINRA, SEC, and regulators from Kentucky, Alabama, South Carolina, and Mississippi agreed to the settlement.

Examples of FINRA arbitration settlements that Morgan Keegan has been ordered to pay over the RMK Funds:

• $881,000 to several investors. The claimants said their actions were over SEC and FINRA violations, breach of fiduciary duty, negligence, failure to supervise, vicarious liability, negligence, and breach of contract.

• $2.5 million to investor Andrew Stein and his companies. Panel members held Morgan Keegan liable for negligence, failure to supervise, and the sale of unsuitable investments.

Related Web Resources:
Regions Settles S.E.C. Case Over Former Morgan Keegan Funds, NY Times, June 22, 2011

Regions settles fraud case, may sell Morgan Keegan, Reuters, June 22, 2011

Texas Securities Act

More Blog Posts:
Morgan Keegan Settles Subprime Mortgage-Backed Securities Charges for $200M, Stockbroker Fraud Blog, June 29, 2011

Morgan Keegan Ordered by FINRA to Pay RMK Fund Investors $881,000, Stockbroker Fraud Blog, April 24, 2011

Morgan Keegan Ordered by FINRA Panel to Pay Investor $2.5 Million for Bond Fund Losses, Stockbroker Fraud Blog, February 23, 2010





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Posted In: Financial Advisers , Morgan Keegan , Texas Securities Fraud

June 29, 2011

Morgan Keegan Settles Subprime Mortgage-Backed Securities Charges for $200M

According to the SEC, FINRA, and state regulators, Morgan Keegan & Company and Morgan Asset Management have consented to pay $200 million to settle subprime mortgage-backed securities-related charges. Also agreeing to pay penalties over their alleged misconduct are Morgan Keegan comptroller Joseph Thompson Weller and ex- portfolio manager James C. Kelsoe Jr.

The two men were accused of causing the false valuation of subprime mortgage backed securities in five Morgan Asset Management-related funds. Per the SEC’s administrative order, Kelsoe directed the fund accounting department to arbitrarily execute price adjustments to the fair values of certain portfolio securities. These adjustments disregarded the lower values for the same securities that outside broker-dealers provided as part of the pricing process. Kelsoe’s directives and the actions that were taken as a result would sometimes cause Morgan Keegan to not price the bonds at current, fair value.

The SEC also says that Kelsoe screened and affected at least one broker-dealer’s price confirmations. That broker-dealer had to provide interim price confirmations that were below the value that the funds were valuing certain bonds at but greater than the initial confirmations that the broker-dealer meant to provide. The interim price confirmations allowed the funds to not mark down the securities’ value to reflect current fair value. Kelsoe is also accused of getting the broker-dealer to withhold price confirmations in certain instances where they would have been significantly lower than the funds’ current valuations of the relevant bonds. The SEC says that Kelsoe fraudulently kept the Navs of funds from being reduced when they should have gone down when the subprime securities market deteriorated in 2007.

Of the $200 million, Morgan Keegan must pay a $75 million penalty to the SEC, $25 million in disgorgement, and $100 million to a state fund that would then pay investors.

Morgan Keegan to Pay $200 Million to Settle Fraud Charges Related to Subprime Mortgage-Backed Securities, SEC, June 22, 2011

Morgan Keegan Entities to Pay $200M In Settlement Over Subprime MBS Valuations, Law 360, June 22, 2011


More Blog Posts:
Morgan Keegan Ordered by FINRA to Pay RMK Fund Investors $881,000, Stockbroker Fraud Blog, April 24, 2011

Morgan Keegan & Co. Inc. Must Pay $250K to Couple that Lost Investments in Hedge Fund with Ties to Bernard L. Madoff Investment Securities, Stockbroker Fraud Blog, March 16, 2011

Morgan Keegan to Pay $9.2M to Investors in Texas Securities Fraud Case Involving Risky Bond Fund, Stockbroker Fraud Blog, October 6, 2010

Continue reading "Morgan Keegan Settles Subprime Mortgage-Backed Securities Charges for $200M" »

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Posted In: Financial Firms , Morgan Keegan , Mortgage Backed Securities , Subprime Mortgage

April 24, 2011

Morgan Keegan Ordered by FINRA to Pay RMK Fund Investors $881,000

A Financial Industry Regulatory Authority arbitration panel is ordering Morgan Keegan to pay a group of investors $881,000 for losses they sustained in Morgan Keegan’s proprietary funds that were concentrated in high-risk subprime mortgage assets. Customers lost about $2 billion.

The Morgan Keegan funds that investors had placed their money in included the:
• RMK High Income Fund
• RMK Multi-Sector High Income Fund
• RMK Advantage Income Fund
• RMK Select Intermediate Bond Fund
• RMK Strategic Income Fund

The claimants alleged misrepresentations and omissions, unsuitable investments, breach of fiduciary duty, failure to supervise, negligence, vicarious liability, breach of contract, FINRA rule violations, and Securities and Exchange Act violations. The FINRA panel found Morgan Keegan liable to the claimants on a number of the claims and ordered the financial firm to pay the following in compensatory damages:

• $33,382 to Palmer and Kathy Albertine
• $105,844 to Jon Albright
• $254,642 to Susan and Sam Davis
• $458,625 to Kendall and Peter Tashie

FINRA also ordered Morgan Keegan to pay $26,850 for all of the forum fees for the arbitration against the financial firm, $28,500 for the Claimaints’ expert witness fee, and $600 for the portion of the filing fee that is non-refundable. Morgan Keegan is a Regions Financial Corporation subsidiary.


Related Web Resources:
FINRA Rules

Securities and Exchange Act of 1934, Cornell University Law School

More Blog Posts:
Morgan Keegan & Co. Inc. Must Pay $250K to Couple that Lost Investments in Hedge Fund with Ties to Bernard L. Madoff Investment Securities, Stockbroker Fraud Blog, March 16, 2011

Morgan Keegan to Pay $9.2M to Investors in Texas Securities Fraud Case Involving Risky Bond Funds, Stockbroker Fraud Blog, October 6, 2010

Morgan Keegan & Co., Inc., Morgan Asset Management, and Two Employees Face Subprime Mortgage Securities Fraud Charges by SEC, Stockbroker Fraud Blog, April 8, 2010


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Posted In: Financial Firms , Morgan Keegan , Regions Financial Corporation

March 16, 2011

Morgan Keegan & Co. Inc. Must Pay $250K to Couple that Lost Investments in Hedge Fund with Ties to Bernard L. Madoff Investment Securities

Financial Industry Regulatory Authority says that Morgan Keegan & Co, Inc. must pay over $250,000 in punitive and compensatory damages to Jeffrey and Marisel Lieberman. The couple suffered financial losses after investing in Greenwich Sentry LLP, a hedge fund whose assets were funneled to Bernard L. Madoff Investment Securities. FINRA contends that the brokerage firm failed to due enough due diligence on the Madoff feeder fund, and was “grossly negligent.”

The Lieberman, who are accusing the Regions Financial unit of fraudulent misrepresentation, negligence breach of fiduciary duty, and violations of Florida and Tennessee statutes, claim that Morgan Keegan and Julio Almeyda, one of its registered representatives, invested $200,000 of their money with Greenwich Sentry. The fund ended up filing for bankruptcy last November.

Per Morgan Keegan’s internal compliance rules, investors should only be allowed to place money in hedge funds if “speculation” is one among their main objectives when opening an account. “Speculation” was the last objective on the couple’s list. FINRA says that not only must the broker-dealer repay the couple’s entire loss of $200,000, but also they must also give them 6% annual interest from when the investment was made, $50,000 in punitive damages, and $14,000 in expert witness fees.

Meantime, the FINRA panel cleared Almeyda of wrongdoing, finding that he did not know that Morgan Keegan had not provided sufficient due diligence nor was he aware that he had given the Lieberman’s false and misleading information about their investments' risks.

Over the last year, Morgan Keegan has found itself dealing with hundreds of arbitration cases nvolving mutual fund investors alleging securities fraud related to the significant losses they sustained during the subprime mortgage crisis.


Related Web Resources:
Morgan Keegan Fined $250,000 Over Madoff Fund, Money News, March 7, 2011

Investors Succeed in Due Diligence Case Against Brokerage Over Madoff-Related Losses, BNA Securities, March 9, 2011


More Blog Posts:
Morgan Keegan to Pay $9.2M to Investors in Texas Securities Fraud Case Involving Risky Bond Funds, Stockbroker Fraud Blog, October 6, 2010

Morgan Keegan & Co., Inc., Morgan Asset Management, and Two Employees Face Subprime Mortgage Securities Fraud Charges by SEC, Stockbroker Fraud Blog, April 8, 2010

Morgan Keegan Ordered by FINRA Panel to Pay Investor $2.5 Million for Bond Fund Losses, Stockbroker Fraud Blog, February 23, 2010


Continue reading "Morgan Keegan & Co. Inc. Must Pay $250K to Couple that Lost Investments in Hedge Fund with Ties to Bernard L. Madoff Investment Securities" »

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Posted In: Financial Firms , Madoff Ponzi Scheme , Morgan Keegan , Mortgage Backed Securities , Regions Financial Corporation , Securities Fraud

October 6, 2010

Morgan Keegan to Pay $9.2M to Investors in Texas Securities Fraud Case Involving Risky Bond Funds

In a Texas securities case, FINRA arbitration panel has ordered Morgan Keegan & Co., a Regions Financial Corp., to pay 18 investors $9.2M for losses related to risky bond funds. The investors contend that the investment firm committed securities fraud when it convinced them to invest in certain funds that included high-risk “subprime” mortgage assets. Clients also claimed that they were persuaded to automatically reinvest dividends in the funds.

This is the biggest award that an arbitration panel has awarded in a Morgan Keegan case involving six bond funds that were heavily involved in mortgage-related holdings. The funds dropped in value significantly in 2007 and 2008. Hundreds of securities claims against the brokerage firm followed. Last July, Regions Financial announced that Morgan Keegan had recorded a $200M charge for probable costs of the bond fund lawsuits.

Arbitrators in Houston made the ruling in the Texas securities case. Included in the total sum was $1.1M in legal fees that, per state law, will be paid to investors. All of the investors involved were clients of Russell W. Stein, a Morgan Keegan broker. Stein is no longer with the broker-dealer. Regulatory filings indicate that he is currently employed with Raymond James Financial Inc. unit Raymond James & Associates Inc.

Stein and his wife were original claimants in this Texas securities fraud case. They too had invested in the bond funds. Their claims are now part of another case involving a group of other investors. Morgan Keegan is considering appealing the FINRA arbitration panel’s decision.

Related Web Resources:
Morgan Keegan to pay bond fund investors $9.2 mln, Reuters, October 6, 2010

Morgan Keegan Must Pay $9.2Mln To Investors - Panel, Wall Street Journal, October 6, 2010

Morgan Keegan Ordered by FINRA Panel to Pay Investor $2.5 Million for Bond Fund Losses, Stockbroker Fraud Blog, February 23, 2010

Morgan Keegan Again Ordered by Arbitrators to Pay Bond Fund Losses to Investors, Stockbroker Fraud Blog, October 27, 2009

Financial Industry Regulatory Authority

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Posted In: Bond Funds , Financial Firms , Morgan Keegan , Regions Financial Corporation , Subprime Mortgage , Texas Securities Fraud

April 8, 2010

Morgan Keegan & Co., Inc., Morgan Asset Management, and Two Employees Face Subprime Mortgage Securities Fraud Charges by SEC

The Securities and Exchange Commission has filed claims against Morgan Keegan & Co, Morgan Asset Management and employees James C. Kelsoe, Jr. and Joseph Thomas Weller for securities fraud that allegedly involved inflating the value of subprime mortgage-backed securities.

According to investors and a number of state regulators, RMK Funds (RMK Advantage Income Fund, RMK High Income Fund, RMK Multi-Sector High Income Fund, RMK Select High Income Fund, RMK Strategic Income Fund, and the RMK Select Intermediate Fund) were marketed and recommended as funds that would provide a consistent income level while the actual risks involved were misrepresented and the funds’ net asset value pricing was manipulated.

The SEC’s enforcement division is accusing Morgan Keegan of failing to put into place reasonable procedures to internally price the portfolio securities in five funds, and as a result, being unable to accurately calculate the funds’ “net asset values.” These inaccurate daily NAVs were published while investors bought shares at inflated prices.

The enforcement division is also accusing fund portfolio manager Kelsoe of acting arbitrarily when he told Morgan Keegan’s Fund Accounting department to adjust prices in a manner that would make certain portfolio securities’ fair value go up. He had his assistant send about 262 “price adjustments” to Fund Accounting between at least January and July 2007.

On numerous occasions, adjustments were arbitrary, disregarded lower values that other dealers had quoted for the same securities, and neglected to reflect fair value. They were entered into a spreadsheet to determine the funds’ NAVs—even though there were no supporting documents. Kelsoe also is accused of regularly telling Fund Accounting to disregard broker-dealers’ month-end quotes that should have been used to validate the prices Morgan Keegan had assigned to the securities in the funds, as well as manipulated pricing quotes he received from at least one broker-dealer.

The Division of Enforcement is accusing Weller, a CPA who belonged to the Valuation Committee and served as the Fund Accounting Department head, of failing to fix the deficiencies in the valuation procedures, as well as not ensuring that fair-valued securities were accurately priced or that NAVs were correctly calculated.

Related Web Resources:
SEC Charges Morgan Keegan and Two Employees With Fraud Related to Subprime Mortgages, SEC.gov, April 7, 2010

SEC Order (PDF)

Morgan Keegan, 2 Employees Face SEC Fraud Charges, The Wall Street Journal, April 7, 2010

Continue reading "Morgan Keegan & Co., Inc., Morgan Asset Management, and Two Employees Face Subprime Mortgage Securities Fraud Charges by SEC " »

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Posted In: Financial Advisers , Morgan Keegan , SEC Enforcement , Securities Fraud

February 23, 2010

Morgan Keegan Ordered by FINRA Panel to Pay Investor $2.5 Million for Bond Fund Losses

A Financial Industry Regulatory Authority panel has ordered Morgan Keegan & Co. to pay investor Andrew Stein $2.5 million because the bond funds that he invested in had bet poorly on mortgage-related holdings. Panel members found Morgan Keegan liable for failure to supervise, negligence, and for selling investments that were unsuitable for Stein and his companies. The claimants, who sustained financial losses, had initially sought $12 million.

Stein’s arbitration claim is just one of over 400 securities claims that have been filed against Morgan Keegan over its bond funds that had invested in subprime-related securities, such as CDO’s (collateralized debt obligations). When the US housing market collapsed, the funds went down in value by up to 82%.

Stein contends that Morgan Keegan did not reveal the kinds of risks involved in investing in the bond funds. He and his companies claim that Morgan Keegan artificially increased the fund assets’ value so that the funds would appear more stable and investors wouldn’t be able to see the actual risks involved.

At least 80 of the securities cases have been heard, and claimants have so far been awarded $10.1 million. Morgan Keegan says that while it has settled a number of securities claims over the bond funds, claimants have dropped 114 other cases.

Stein and his two companies are pursuing a securities claim against Regions Financial and Morgan Asset Management, Inc. They are claiming fraudulent pricing and valuation of funds.

Our securities fraud law firm represents clients that sustained financial losses as a result of investing in Morgan Keegan bond funds. Please contact us for your free case evaluation.

Related Web Resources:
Morgan Keegan Must Pay Investor, Wall Street Journal, February 22, 2010

FINRA

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Posted In: Arbitration , Bond Funds , FINRA , Financial Firms , Morgan Keegan , Regions Financial Corporation , Securities Fraud

February 8, 2010

Claims Filed Against Morgan Keegan Division of Regions Financial Causes Shortage of Arbitrators

The Financial Industry Regulatory Authority has had to bring in hundreds of additional arbitrators to deal with the approximately 400 securities fraud claims that investors have filed against Regions Financial Corp., the investment banking unit of Morgan Keegan & Co. Investors are seeking to recover $35 million after three of its mutual funds dropped in value by up to 82% when the housing market fell apart. The Region Financial Corp mutual funds contained subprime-related securities, including collateralized debt obligations, low-quality mortgages, and mortgage-backed securities.

Morgan Keegan claims that it notified investors of the risks associated with investing in the mutual funds. Regions says that to date, 79 arbitration cases have been heard. 39 of the cases were dismissed and 114 arbitration claims seeking $24 million were dropped before decisions were reached. The investment firm is putting up a tough fight against the complaints. So far, arbitrators have been awarded $7.6 million.

Because so many investors filed arbitration claims, FINRA has had to contact arbitrators in different parts of the US and ask them to come to the different cities where the hearings on the mutual funds are talking place. The average pool of arbitrators in each city is now approximately 721 persons. This is an increase from its previous average pool of 87 arbitrators.

Stockbroker fraud attorney William Shepherd says that his securities fraud law firm Shepherd Smith Edwards & Kantas LTD LLP is committed to helping investors recover their financial losses related to Regions Financial Corp mutual funds. “Our law firm is handling dozens of claims nationwide regarding these funds, each on an individual basis. Some law firms have grouped claims and are using other methods we believe do not properly serve victims. This has skewed results against investors.” SSEK offers prospective clients a free case evaluation.

Related Web Resources:
Arbitrator Out of Work? Call Finra, The Wall Street Journal, February 5, 2010

FINRA

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Posted In: Financial Firms , Morgan Keegan , Mutual Funds , Regions Financial Corporation

October 27, 2009

Morgan Keegan Again Ordered by Arbitrators to Pay Bond Fund Losses to Investors

Morgan Keegan & Co. has been ordered to pay $51,000 to Larry and Diane Papasan. Larry Papasan is Memphis Light, Gas and Water Division’s former president.

The Papasans filed their arbitration claim against Morgan Keegan last year after they lost about $80,000 in the account they had with the investment firm. The Papasans’ claim is one of many arbitration cases and securities fraud lawsuits filed by Morgan Keegan investors who sustained RMK fund losses. The general accusation is that the broker-dealer misrepresented the volatility of the bond funds, which they allegedly were not managing conservatively.

Larry Papasan, who is retired, opened his account because he knew John Wilfong, a former Morgan Keegan financial adviser. Wilfong felt so confident about the bond funds that he even sold them to his mother, Joyce Wilfong, who also went on to suffer financial losses from her investment. Her friend Maxine Street also suffered bond fund losses.

The two women filed a joint arbitration claim against Morgan Keegan. Joyce was awarded $68,000, while Street settled for an undisclosed sum.

According to the Papasans, John Wilfong spoke with Jim Kelsoe, the RMK funds’ manager, prior to leaving Morgan Keegan for UBS. Kelsoe allegedly told Wilfong not to liquidate because the funds were safe. The Morgan Keegan fund manager is named in other cases for allegedly failing to disclose the risks associated with the mutual fund investments.

Related Web Resources:
Latest RMK Award Goes to Ex- MLGW Head, Memphis Daily News, October 27, 2009

Two Morgan Keegan Funds Crash and Burn, Kiplinger, December 2007

Continue reading "Morgan Keegan Again Ordered by Arbitrators to Pay Bond Fund Losses to Investors" »

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Posted In: Arbitration , Bond Dealers , Financial Firms , Morgan Keegan , Mutual Funds , Securities Fraud

September 14, 2009

Morgan Keegan Hit with Large Penalty for Fouling Ex-NBA Star

Following a dispute that was resolved in arbitration, broker-dealer Morgan Keegan & Co. must pay former NBA player Horace Grant $1.46 million. The amount is the largest arbitration loss for Morgan Keegan to date. Morgan Keegan is the securities brokerage firm of Regions Financial Corp.

The award, issued by the Financial Industry Regulatory Authority, is for damages that Grant incurred because he invested in Morgan Keegan’s risky mutual funds that were involved in collateralized debt obligations connected to residential mortgages. Grant had originally sought $1.5 million for the damages he sustained.

There are still several hundred investment fraud lawsuits pending against the brokerage firm over mutual funds involving subprime mortgages that declined because the US housing market fell apart and loans defaulted. Up to 95% of the funds’ value has dissolved since the middle of 2007.

Green used to play for the Chicago Bull, the Los Angeles Lakers, the Seattle Supersonics, and the Orlando Magic. In his arbitration case, the former NBA basketball player contended that Morgan Keegan misrepresented the level of risk that came with the bond funds that he purchased.

Already, Morgan Keegan has lost a number of cases in 2009. Seven of the cases have cost the broker-dealer $3 million. Other professional athletes who have filed lawsuits against Morgan Keegan for losses that they say they sustained from the bond funds are Jerome Woods, formerly of the Kansas City Chiefs, and former St. Louis Cardinals baseball player Tim McCarver. Woods won $950,000 against the brokerage firm while McCarver resolved his claim for $100,000.

Our stockbroker fraud law firm represents numerous investors who have sued Morgan Keegan for misrepresenting risky investments as safer kinds of investments.


Related Web Resources:
Ex-NBA star wins $1.45M arbitration claim against Morgan Keegan, Investment News, September 14, 2009

Morgan Keegan ordered to pay former NBA star $1.4M, Memphis Business Journal, September 14, 2009

NFL retiree gets $950,000 for Morgan Keegan mutual fund losses, Commercial Appeal, April 14, 2009

McCarver Awarded $100K in Morgan Keegan Claim, Memphis Daily, February 26, 2009

Continue reading "Morgan Keegan Hit with Large Penalty for Fouling Ex-NBA Star" »

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Posted In: Arbitration , Collateral Debt Obligation , Financial Firms , Morgan Keegan

July 16, 2009

Stockbroker Fraud Law Firm Shepherd Smith Edwards & Kantas LTD LLP Files Claims Against Morgan Keegan Following SEC Wells Notice

Last week, the Staff of the Atlanta Regional Office of the US Securities and Exchange Commission sent Morgan Keegan & Co, Inc., Morgan Asset Management, Inc., and three employees a “Wells” notice. The notice stated the Staff’s intention to recommend that the Commission bring enforcement actions over possible federal securities laws violations. Morgan Keegan, is a subsidiary of Regions Financial Corporation.

The Staff had been investigating a number of mutual funds that Morgan Asset Management had previously managed. In light of the Wells notice, the securities fraud law firm of Shepherd Smith Edwards & Kantas LTD LLP is continuing to file arbitration claims against Morgan Keegan for covering up the risks associated with their bond funds.

Our investor clients are accusing Morgan Keegan of selling specific funds that it promoted as relatively conservative investments when in fact, the funds were exposed to subprime mortgage securities, collateral debt obligations, and other high risk debt instruments. Investors are alleging that Morgan Keegan took part in a scam that defrauded investors of certain bond funds while misrepresenting their degree of involvement in more high risk investments. As a result, our investor clients suffered major financial losses after the subprime mortgage market collapsed.

The Allegations Against Morgan Keegan Name a Number of RMK Funds, including:

• RMK Multi-Sector High Income Fund
• RMK Select High Income Fund
• RMK High Income Fund
• RMK Select Intermediate Bond Fund
• RMK Advantage Income Fund
• RMK Strategic Income Fund

**A Wells notice is not a formal charge or official finding of wrongdoing. It gives the recipients a chance to offer their accounts about the issues raised by the notice before the Commission takes any formal action.

Our securities fraud law firm is comprised of a team of experienced stockbroker fraud attorneys, consultants, and others. Over the years, we ‘ve taken our more than 100 years of combined experience in securities law and the securities industry to help thousands of investors recoup their losses.

Shepherd Smith Edwards & Kantas LTD LLP successfully represents clients in matters of arbitration, mediation, negotiation, and litigation. Our investor fraud cases have been heard in state and federal courts, as well as in arbitration before the Financial Industry Regulatory Authority, the American Arbitration Association, and the New York Stock Exchange.

Related Web Resources:
SEC could take action against Morgan Keegan, Bizjournals.com, July 15, 2009

Morgan Keegan Target For Possible SEC Suit, Memphis Daily News

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Posted In: Arbitration , Broker Fraud , Financial Firms , Morgan Keegan , Regions Financial Corporation

June 15, 2009

Ex-Morgan Keegan Adviser Pleads Guilty to Stealing from Senior Investor

A former Morgan Keegan adviser has pleaded guilty to charges that he stole from an elderly investor. Charges included investment adviser fraud and making and subscribing a bogus tax return. Now, Harold “Hal” Blondeau could be facing up to eight years in prison. He also may have to pay restitution to his victim. Martha B. Capps is now 83.

Blondeau received power of attorney over the senior investor’s accounts as she was experiencing the beginning stages of Alzheimer’s. She wanted him to keep her inheritance away from her husband. Large sums were taken out of Capps’ accounts.

The former Morgan Keegan adviser is accused of using some of the stolen funds to pay for personal expenses, including a beach house and $24,000 in wine. The beach house, purchased in Capps’ name, would have gone to Blondeau upon her death.

Almost $3 million was taken from the account of Martha B Capps. In 2007, attorneys for the elderly woman filed a lawsuit against Blondeau, his son Neal Knight, and Knight’s two daughters. The complaint contends that the group stole money from Capps. Blondeau and Knight are accused of establishing a non-profit foundation in the name of Capps’ father and donating the money to different organizations to enhance their own images. Capps’ money was also used for the college education of the two men’s children.

In 2007, Blondeau was let go from Morgan Keegan because he failed to disclose a loan that was obtained from a client. To date, Blondeau is the only one out of the four civil lawsuit defendants that is facing criminal charges in federal court.

Taking advantage of an elderly investor is a crime and can be grounds for an investor fraud lawsuit. Unfortunately, senior investors—especially those that have inherited money or have retirement savings—are easy targets of investor fraud.

Related Web Resources:
Raleigh investment adviser pleads guilty to fraud, Triangle Business Journal, June 11, 2009

Financial advisor admits to stealing from client, News & Observer, June 11, 2009

Elderly heir claims fraud by advisers, News & Observer, October 13, 2007

Fraud Target: Senior Citizens, FBI

Senior Investment Fraud News & Alerts, NASAA

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Posted In: Financial Advisers , Morgan Keegan , Senior Investors

May 12, 2009

Morgan Keegan & Co’s Regions Financial May Face SEC Charges Over Improper Auction-Rate Securities Sales

Regions Financial Corp, a Morgan Keegan & Co brokerage unit, says the US Securities and Exchange Commission may file a civil proceeding against it over charges that the firm allegedly engaged in the improper sale of auction-rate securities. The regulator filed a “Wells Notice” against Morgan Keegan in March. The notice means that a civil proceeding could be next. It also gives Morgan Keegan the opportunity to prepare a defense.

The SEC is examining the degree to which Morgan Keegan revealed to its clients the risks associated with investing in the auction-rate market and whether the firm sold a huge amount of that debt even when its ability to support the auction had declined.

Morgan Keegan is purchasing back the ARS it sold to clients. According to Morgan Keegan spokesperson Kathy Ridley, the investment firm has already gotten back $28 million in ARS.

Our securities fraud lawyers at Shepherd Smith Edwards & Kantas LTD LLP are working with numerous clients on claims against Morgan Keegan and Regions Financial over failed auction-rate securities investments, as well as investor claims involving these Morgan Keegan Bond Funds:

• RMK Strategic Income Fund (RSF)

• RMK Advantage Income Fund (RMA)

• RMK Multi-Sector-High Income Fund (RHY)

• RMK High Income Fund (RHM)

• RMK Select High Income Funds: C (RHICX), I (RHIIX), and A (MKHIX)

• RMK Select Intermediate Bond Funds: A (MKIBX), C (RIBCX), I (RIBIX)

The collapse of the $330 billion auction-rate securities market left many investors unable to sell auction-rate debt that they were told were safe to invest in and that were the liquid equivalent of cash. Since then, many investors have come forward complaining that they were misled about the risks tied to investing in the market.

Regions Financial unit may face SEC charges, Reuters, May 11, 2009

Regions Financial says Morgan Keegan unit received 'Wells notice', The Birmingham News, May 12, 2009

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Posted In: Broker-Dealers , Financial Firms , Morgan Keegan

April 11, 2009

Did Morgan Keegan Tutor Towns to Invest into Their Own Risky Deals?

The Tennessee city of Lewisburg got an unpleasant surprise this January when they discovered that their annual interest rates on a bond was now $1 million. Officials had gotten themselves involved in risky municipal bonds after speaking with investment firm Morgan Keegan & Co. at a state-sponsored seminar five years ago. Not only did Morgan Keegan offer them advice about these complex financial transactions, but their representatives made the deal.

Unfortunately, Lewisburg is just one of the hundreds of US cities and counties feeling the financial fallout because high-risk municipal bond derivates have gone sour. For example, officials in Tennessee’s Claiborne County were told by Morgan Keegan bankers that they would have to pay $3 million (an amount they can’t afford) to remove themselves from municipal bond derivatives. And in Mount Juliet, city leaders discovered that payment of their bonds had gone up 500% to $478,000.

Morgan Keegan has been able to dominate the lightly regulated municipal bond marketplace. Based in Tennessee, the investment company has sold $2 billion in municipal bond derivates to 38 cities and counties since 2001. Morgan Keegan reps say they’ve managed to save counties and cities money by providing lower interest rates. They also maintained that it is not their fault that the economic crisis has created turmoil in the bond market.

Now, however, federal regulators are trying to figure out how to restrict municipal bond derivative use. They also want to determine whether it makes sense for big investment banks to convince small counties and cities to take part in transactions that decrease interest rates but come with higher risks.

Morgan Keegan’s managing director Joseph K Ayres says that the investment firm is being unfairly blamed for the economic slump and that there was no conflict of interest when it advised municipalities and underwrote bonds. He says that the state of Tennessee had requested and approved the seminar and that the firm did not offer unbiased descriptions of municipal bond options or market any products during the session. Lewisville officials, however, say that Morgan Keegan failed to provide them with proper advice and did not fully explain the risks of their investment to them.

Investment banks make more in yearly income and fees from derivatives than from fixed-income bonds. In Tennessee alone, Morgan Keegan has made millions of dollars in fees. Unfortunately, it’s the municipalities and other investors who stand to lose a great deal.

Shepherd Smith Edwards & Kantas LTD LLP Founder and Stockbroker Fraud Attorney Bill Shepherd has this to say: “As a former advisor to municipalities I can tell you that those who manage public funds depend heavily on their financial advisors to be not only truthful but candid about investment risks. It is disgraceful when unscrupulous “experts” abuse the trust placed in them to mine public funds for their own greed. Our firm currently represents a number of municipalities, credit unions, etc., which have lost hundreds of millions of dollars.”

Firm Acted as Tutor as It Sold Risky Deals to Towns, NY TImes, April 7, 2009

Continue reading "Did Morgan Keegan Tutor Towns to Invest into Their Own Risky Deals?" »

Posted by Shepherd Smith Edwards & Kantas LTD LLP | | Email This Post

Posted In: Financial Firms , Morgan Keegan

April 7, 2009

Morgan Keegan Ordered by FINRA to Pay Investors $267,711 Plus Interest for Losses in RMK Bond Funds

Separate Financial Industry Regulatory Authority arbitration panels have issued awards to investors who suffered financial losses in Regions Morgan Keegan mutual funds. Last week, a FINRA panel awarded two California residents $267,711 plus interest for their losses—the largest bund fund arbitration award that Morgan Keegan has been ordered to pay to date.

In two arbitration cases last month, investors were also awarded six-figure sums, with one award amount larger than the damages claimed by investors. To date, FINRA panels have awarded over $871,000 to investors for their Morgan Keegan-related claims.

All of the arbitration claims accuse Morgan Keegan of concealing the actual risks associated with their bond funds. The investors have accused Morgan Keegan of selling certain funds as relatively conservative investments when they were actually exposed to a number of high risk debt instruments, including collateral debt obligations and subprime mortgage securities. They say Morgan Keegan engaged in a scheme to defraud investors of certain bond funds and misrepresented the extent of their holdings in riskier investments.

Morgan Keegan investors sustained substantial financial losses after the subprime mortgage market declined. RMK funds named in the allegations against Morgan Keegan, include:

RMK Select Intermediate Bond Fund
RMK Strategic Income Fund
RMK Advantage Income Fund
RMK High Income Fund
RMK Select High Income Fund
RMK Multi-Sector High Income Fund

Stockbroker fraud law firm Shepherd Smith Edwards & Kantas LTD LLP is investigating claims by investors who say they sustained financial losses with Morgan Keegan, and our securities fraud attorneys are filing investment fraud claims on their behalf.

Related Web Resources:
The Law Firm of Shepherd Smith Edwards & Kantas Continues to File Cases Against Morgan Keegan Bond Fund Investments in Light of Recent Arbitration Awards -- RSF, RMA, RHY, RMH, RHICX, MKHIX, RHIIX, RIBCX, MKIBX, RIBIX, Globe Newswire, April 2, 2009

Morgan Keegan must pay investor $267,000, regulator says, Birmingham News, April 2, 2009

Arbitration and Mediation, FINRA

Posted by Shepherd Smith Edwards & Kantas LTD LLP | | Email This Post

Posted In: Arbitration , FINRA , Financial Firms , Morgan Keegan

March 14, 2009

Morgan Keegan Settlement with Children’s Wish Fund Shows the Impact Recouping Investment Losses Can Have On The Little People

In 2007, Morgan Keegan settled an arbitration claim with the Indiana Children’s Wish Fund for an undisclosed amount. The charity had reported losing $48,000 in a mutual fund it had invested in with the brokerage firm.

The Wish Fund became involved in mortgage securities after a local banker persuaded the charity’s executive director, Terry Ceaser-Hudson, to invest money in a bond fund through Morgan Keegan. Ceaser-Hudson was put in touch with broker Christopher Herrmann. When she asked him about the risks of investing in the fund, she says he assured her that investing it would be as safe as investing in a CD or a money market account.

In June 2007, the Wish Fund invested nearly $223,000 in the fund. That week, two Bear Stearns funds collapsed.

Less than three weeks after investing the charity’s money in the Morgan Keegan fund, Ceaser-Hudson says she was surprised to see a $5,000 loss. As the bond fund’s net asset value fell in September, she ordered the sale of the stakes to be sold. She got back about $174,000 of the $223,000 she had invested on behalf of the Wish Fund—that’s a 22% loss in just three months. Ceaser-Hudson filed an arbitration claim against Morgan Keegan and accused Herrmann of breach of duty when he making an unsuitable recommendation to the Wish Fund.

It appears as if the Regions Morgan Keegan mutual fund board members, like many investment professionals, did not properly assess the risks that came with investing in mortgage securities. Most of the brokerage firm’s directors do not own shares in the bond funds that were devastated, which means that the majority of them were not impacted by their decline.

For a charity like the Children’s Wish Fund, however, the losses it incurred had been preventing nine sick children from having their wishes granted.

Related Web Resources:
The Debt Crisis, Where It’s Least Expected, New York Times, December 30, 2007

The Indiana Children's Wish Fund

Continue reading "Morgan Keegan Settlement with Children’s Wish Fund Shows the Impact Recouping Investment Losses Can Have On The Little People" »

Posted by Shepherd Smith Edwards & Kantas LTD LLP | | Email This Post

Posted In: Morgan Keegan , Mortgage Backed Securities , Mutual Funds

January 12, 2008

Investors Complain about Mutual Funds Sold by Morgan Keegan

Some Investors have complained they were sold mutual funds by the securities firm of Morgan Keegan & Company, Inc. based on representations of safety which were unfounded. At this time such complaints are only allegations and no determination has been made that the firm and/or its representations engaged in any wrongdoing.

The funds in question include RMK High Income Fund (RMH), RMK Advantage Income Fund (RMA), and RMK Multi-Sector High Income Fund (RHY). Reportedly, these funds were heavily invested into collateralized debt obligations (CDO's) based on sub-prime mortgages and have therefore declined sharply in value.

Morgan Keegan is a Memphis, Tenessee based brokerage firm and is a division of Regions Financial Group. The firm's offices are located primarily in the South, including in the states of Alabama, Arkansas, Florida, Georgia, Kentucky, Mississippi, North Carolina, South Carolina, Tennessee and Virginia.

Persons who believe they were sold the above listed mutual funds, or other investments, based of false information or misrepresentations concering the safety of such investments can contact the law firm of Shepherd Smith & Edwards. Our law firm represents investors who have lost money as a result of worngdoing by members of the securities industry, including Morgan Keegan. Contact us today to arrange a free confidential consultation via telephone to discuss your situation with one of our experienced attorneys.

Additional information is available to you here regarding Morgan Keegan & Company and Regions Financial Group.

Posted by Shepherd Smith Edwards & Kantas LTD LLP | | Email This Post

Posted In: Morgan Keegan , Mortgage Backed Securities , Mutual Funds

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