Yourlawyer.com (Regions Morgan Keegan Securities Fraud News)

Morgan Keegan Loses Sixth FINRA Arbitration Over Failed Bond Funds

Tue, 21 Apr 2009 00:00:00 -0700

An investor who lost money as a result of the collapse of Morgan Keegan bond funds was awarded $950,000 by an arbitration panel. According to Investment News, the award marked the sixth time a Financial Institution Regulatory Authority (FINRA) panel ruled against Morgan Keegan in a arbitration case involving its failed bond funds.

In 2007, the Morgan Keegan bond funds lost up to 95 percent of their value, thanks to losing bets on high-risk collateralized debt obligations. Late last year, the Securities Litigation and Consulting Group, Inc, a financial economics consulting firm that provides expert witnesses to parties involved in securities litigation, issued a report that found Morgan Keegan misrepresented hundreds of millions of dollars of leveraged asset-backed securities as corporate bonds and preferred stocks. This made the funds seem more diversified and less risky than they actually were, the report said.

The report concluded that had Morgan Keegan performed a rudimentary analysis on its holdings - as it had claimed to have done - it would have determined that investors in the funds were being exposed to as much as 10 times the credit risk of the underlying, already risky, debt in exchange for 1 percent or 2 percent higher returns than a diversified, transparent high-yield bond portfolio would have earned.

Former NFL defensive back Jerome Woods and his wife were among the hundreds of investors who lost money as a result of the collapse of the funds. In his claim against the Tennessee-based firm, Woods alleged negligence and a breach of fiduciary duty by Morgan Keegan.

The Woods' attorney told the Memphis Commercial Appeal that although his clients were not interested in speculative risk, "Morgan Keegan recommended that they invest almost their entire portfolio in junk bond funds that were highly speculative." The Woods' alleged that Morgan Keegan never disclosed the true risk of their investment.

The Woods' were seeking a total of $1.7 million in damages from Morgan Keegan, but were awarded $950,000 in compensatory damages. According to Investment News, the panel gave no reason for its decision.

Including the Woods' claim, the Morgan Keegan has been ordered to pay investors in the failed funds a total of $1.6 million in damages in six cases brought before a FINRA arbitration panel. The Woods' case resulted in the largest FINRA award to date.

Morgan Keegan Blamed for Municipal Bond Derivative Debacle in Tennessee

Wed, 08 Apr 2009 00:00:00 -0700

Morgan Keegan & Company, an investment bank based in Tennessee, is being scrutinized for its role in touting investments in municipal bond derivatives that have left the finances of many small towns in ruins. According to The New York Times, Morgan Keegan not only sold the derivatives, but took an active role in "educating" community leaders about the risks and benefits of the investments.

According to the Times report, one town - Lewisburg, Tenn.- that entered into one of these deals saw its interest payments quadruple to $1 million per year. The payments have crippled the town's finances. And the scenario is the same in many other communities that were convinced by Morgan Keegan to take on these risky bonds.

Leaders in many communities advised by Morgan Keegan told the Times they were not made fully aware that interest rates on the bonds could go sky high if the economy took a turn for the worse. Because the market for municipal bond derivatives in Tennessee was poorly regulated, Morgan Keegan was able to teach many of the state-sponsored seminars that were meant to educate local officials about the risks and benefits of these investments.

According to the Times, that allowed Morgan Keegan to dominate nearly every facet of the municipal bond derivative business in the state. It worked out well for the investment bank: According to the Times, Morgan Keegan sold more than $2 billion of the derivatives to 38 Tennessee communities since 2001. That business generated millions of dollars in fees for Morgan Keegan.

Morgan Keegan claims that it provided unbiased and complete information about municipal bond derivatives in the seminars it taught. But according to the Times, one expert who reviewed a textbook provided to attendees of a 2003 seminar said it focused much more on benefits than risks. Another critic of the municipal bond industry told the Times that the Morgan Keegan seminars were little more than infomercials. An attendee of one such meeting told the Times that the information presented was "way over my head", but that reps from Morgan Keegan were reassuring, telling her "Don’t worry if you don’t understand it."

Since the Times began investigating the municipal bond derivative fiasco, officials in Tennessee have ordered a statewide freeze on bond derivatives and a review of the seminar taught by Morgan Keegan and others. In Washington, federal regulators are now considering ways to restrict the use of municipal bond derivatives, the Times said.

Tim McCarver Files Claim Over Morgan Keegan Losses

Tue, 25 Nov 2008 00:00:00 -0800

Sports broadcaster Tim McCarver is just the latest angry investor to file a claim against Regions Morgan Keegan over its failed bond funds. According to the New York Post, McCarver is seeking $1.25 million in damages because of the losses he suffered when the Morgan Keegan funds crashed in 2007.

Regions Morgan Keegan is facing an avalanche of arbitration claims over the failed bond funds. Plaintiff’s lawyers say 1,000 to 1,500 arbitration cases ultimately could be filed against Morgan Keegan.

McCarver, a former Major League Baseball catcher, and now a color commentator for Fox Sports, claims he lost $1 million from his investment account after his broker failed to heed his instructions and keep his money in conservative investments. According to his lawyer, representatives of Morgan Keegan led McCarver to believe that his money was being held in investments that "were tantamount to buying CDs and [safe] bonds," the New York Post said.

McCarver's lawyer told the Post that his arbitration claim is scheduled to be heard by the Financial Industry Regulatory Authority in early 2009.

In 2007, the Regions Morgan Keegan Select Intermediate Bond Fund and Regions Morgan Keegan Select High Income Fund lost up to 95 percent of their value, thanks to losing bets on high-risk collateralized debt obligations. Last month, the Securities Litigation and Consulting Group, Inc, a financial economics consulting firm that provides expert witnesses to parties involved in securities litigation, issued a report that found Regions Morgan Keegan misrepresented hundreds of millions of dollars of leveraged asset-backed securities as corporate bonds and preferred stocks. This made the funds seem more diversified and less risky than they actually were, the report said.

The report concluded that had Regions Morgan Keegan performed a rudimentary analysis on its holdings - as it had claimed to have done - it would have determined that investors in the funds were being exposed as much as 10 times the credit risk of the underlying, already risky, debt in exchange for 1 percent or 2 percent higher returns than a diversified, transparent high-yield bond portfolio would have earned.

Split Decision in First Regions Morgan Keegan Bond Fund Arbitrations

Mon, 17 Nov 2008 00:00:00 -0800

Investors in failed Regions Morgan Keegan bond funds have started bringing their cases to arbitration, and there have been decisions in four such suits. According to a report in "The Commercial Appeal", investors have won two cases so far, but Morgan Keegan has been successful in two others. Morgan Keegan, like most investment firms, requires brokerage clients to agree to submit disputes to arbitration when they first open accounts.

Since 2007, the Regions Morgan Keegan Select Intermediate Bond Fund and Regions Morgan Keegan Select High Income Fund lost up to 95 percent of their value, thanks to losing bets on high-risk collateralized debt obligations. Last month, the Securities Litigation and Consulting Group, Inc, a financial economics consulting firm that provides expert witnesses to parties involved in securities litigation, issued a report that found Regions Morgan Keegan misrepresented hundreds of millions of dollars of leveraged asset-backed securities as corporate bonds and preferred stocks. This made the funds seem more diversified and less risky than they actually were, the report said.

The report concluded that had Regions Morgan Keegan performed a rudimentary analysis on its holdings - as it had claimed to have done - it would have determined that investors in the funds were being exposed as much as 10 times the credit risk of the underlying, already risky, debt in exchange for 1 percent or 2 percent higher returns than a diversified, transparent high-yield bond portfolio would have earned.

According to "The Commercial Appeal", at least 50 claims against Morgan Keegan have been submitted to the Financial Industry Regulatory Authority. Plaintiff’s lawyers say 1,000 to 1,500 arbitration cases ultimately could be filed against Morgan Keegan, with potential damages surpassing $200 million. In addition, Morgan Keegan has been named in at least about 10 lawsuits filed by investors in U.S. District Court in Memphis,

"The Commercial Appeal" is reporting that in the most recent arbitration decision, Aubrey and Martha Wright of Georgia were awarded $90,052 as compensation for losses they claimed in four Regions Morgan Keegan funds. Another investor, Samuel Short of Brookwood, Ala., was awarded $15,000 in an earlier arbitration proceeding.

But not all claims have been successful. According to "The Commercial Appeal", an $80,000 claim filed by Ray and Ruth Colter of Mississippi was denied, as was a $25,414 claim -- plus $20,000 in punitive damages filed by Robert McLean of North Little Rock. No reason was given for the denials.

Regions Morgan Keegan Facing Slew of Arbitration Claims Over Bond Funds

Tue, 11 Nov 2008 00:00:00 -0800

Regions Morgan Keegan is facing an avalanche of arbitration claims over its failed bond funds. The first wave of Morgan Keegan arbitration hearings is scheduled to begin later this year, with more to follow early next year. Plaintiff's lawyers say 1,000 to 1,500 arbitration cases ultimately could be filed against Morgan Keegan, with potential damages surpassing $200 million.

Regions Morgan Keegan is the investment banking and securities division of Regions Financial Corp, the largest banking system in middle Tennessee. Since 2007, the firm's Regions Morgan Keegan Select Intermediate Bond Fund and Regions Morgan Keegan Select High Income Fund lost up to 95 percent of their value, thanks to losing bets on high-risk collateralized debt obligations.

Last month, the Securities Litigation and Consulting Group, Inc, a financial economics consulting firm that provides expert witnesses to parties involved in securities litigation, issued a report that found Regions Morgan Keegan misrepresented hundreds of millions of dollars of leveraged asset-backed securities as corporate bonds and preferred stocks. This made the funds seem more diversified and less risky than they actually were, the report said.

The report concluded that had Regions Morgan Keegan performed a rudimentary analysis on its holdings - as it had claimed to have done - it would have determined that investors in the funds were being exposed as much as 10 times the credit risk of the underlying, already risky, debt in exchange for 1 percent or 2 percent higher returns than a diversified, transparent high-yield bond portfolio would have earned.

According to investmentnews.com, Morgan Keegan lost its first arbitration case related to the funds' losses this month. A panel administered by the Financial Industry Regulatory Authority Inc. of New York and Washington awarded two investor plaintiffs a total of $90,000. The panel also assessed all forum fees against Morgan Keegan. Typically, panels split such fees.

"This is a clear indication of what is to come in arbitration awards against Morgan Keegan," a lawyer representing the two plaintiffs told the website.

Regions Morgan Keegan Lawyers Class Action Lawsuit

Tue, 11 Nov 2008 00:00:00 -0800

Regions Morgan Keegan Class Action Lawsuit Lawyers

Keywords: Securities Fraud Lawyers Class Action

The lawyers and attorneys at our firm are offering free case evaluations to individuals, companies and institutions that lost more than $100,000 as a result of their investment in Regions Morgan Keegan bond funds. The Regions Morgan Keegan class action lawsuit lawyers at our firm have determined that investors in the bond funds were misled about their true risks until well after the funds sustained significant losses in 2007. Because of this deception, investors in Regions Morgan Keegan bond funds lost a total of $2 billion that year.

Investors who faced substantial losses of more than $100,000 because of investments in the Regions Morgan Keegan bond funds may be entitled to compensation. Evidence is mounting that executives and officers at Regions Morgan Keegan deliberately misled investors when they promoted their risky bond funds. If you or someone you know suffered losses as result of this deception, we urge you to contact one of our Regions Morgan Keegan class action lawsuit lawyers as soon as possible to protect your legal rights.

Regions Morgan Keegan Bond Fund Losses

Regions Morgan Keegan is the investment banking and securities division of Regions Financial Corp, the largest banking system in middle Tennessee. The brokerage firm has offices in Alabama, Arkansas, Florida, Georgia, Kentucky, Mississippi, North Carolina, South Carolina, Tennessee and Virginia. Our Regions Morgan Keegan class action lawsuit lawyers are currently offering evaluations to those investors who lost more $100,000, and who purchased shares in the bond funds from December 6, 2004 through October 3, 2007.

The Regions Morgan Keegan bond funds a the center of our class action lawsuit are the Select Intermediate Bond Fund ("MKIBX") and the Select High Income Fund ("RHIIX"). Each fund had three classes of shares that it issued. Those classes are:

Regions Morgan Keegan Select Intermediate Bond Fund A (MKIBX)

Regions Morgan Keegan Select Intermediate Bond Fund C (RIBCX)

Regions Morgan Keegan Select Intermediate Bond Fund I (RIBIX)

Regions Morgan Keegan Select High Income Fund A (MKHIX)

Regions Morgan Keegan Select High Income Fund C (RHICX)

Regions Morgan Keegan Select High Income Fund I (RHIIX)

As of November 23, 2007, Morningstar reported that the Select High Income Fund's net asset value was down almost 55 percent year-to-date; from December 31, 2006 until November 30, 2007, the Select High Income Fund's net asset value per share declined from $10.14 to $3.91 for a loss of $6.23 per share, or 61.4 percent. For the same period, Morningstar reported that the Select Intermediate Bond Fund's net asset value was down over 43 percent; the Select Intermediate Bond Fund's net asset value per share declined from $9.93 to $5.07 for a loss of $4.86 per share or 48.9 percent.

In February 2008, the Securities and Exchange Commission (SEC) asked for information from Regions Morgan Keegan concerning funds that lost dramatic value in the preceding few months. The SEC was concerned because the funds had lost over 50 percent of their value since the mortgage meltdown had begun, far more than the industry average. Apparently, the regulatory agency is probing the extreme exposure to high-risk subprime mortgages within these funds.

Regions Morgan Keegan Deception

Many investors in these Regions Morgan Keegan bond funds did not know that the investments were much riskier than they had been presented. Investors were not told that mortgage-backed securities and collateralized debt obligation (CDO) made up over 50 percent of each fund’s portfolio. While such investments pay interest like ordinary bonds, they carry a much higher risk because there is a chance that the mortgages backing them will not be paid off.

In 2007, as the mortgage market began to implode, this is exactly what happened. It was only then that investors in Regions Morgan Keegan funds found they were exposed to substantially more risk than investors in other high and intermediate income funds. Investors who have filed lawsuits against Regions Morgan Keegen claim that they were not aware of the bond fund's ties to risky subprime mortgage-related assets when they made their investments.

In October 2008, a report published by the Securities Litigation and Consulting Group, Inc, concluded that Regions Morgan Keegan did indeed mislead investors about the risks associated with its bond funds. According to its report, Regions Morgan Keegan misrepresented hundreds of millions of dollars of leveraged asset-backed securities as corporate bonds and preferred stocks. This made the funds seem more diversified and less risky than they actually were, the report said.

The report concludes that had Regions Morgan Keegan performed a rudimentary analysis on its holdings (which it had to claimed to have done), it would have easily determined that investors in the funds were being exposed to as much as 10 times the credit risk of the underlying, already risky, debt. This higher risk was hardly worth taking on, as the bond funds promised investors only a 1 - 2 percent higher return than they would have expected from a diversified, transparent high-yield bond portfolio.

Legal Help for Regions Morgan Keegan Bond Fund Investors

Since 2007 Morgan Asset Management, Inc., Morgan Keegan & Company, Inc., Regions Financial Corporation, MK Holding, Inc., Regions Financial Corporation, PricewaterhouseCoopers LLP, and certain individuals, officers and directors have been named in various class action individual lawsuits. These lawsuits were filed by and on behalf of investors who purchased shares of the Regions Morgan Keegan Select Intermediate Bond Fund and Regions Morgan Keegan Select High Income Fund from December 6, 2004 through October 3, 2007.

Many of the Regions Morgan Keegan lawsuits claim the firm violated federal and state securities laws and ignored investors' request for only safe, short-term corporate commercial paper investments. The lawsuits also claim that Regions Morgan Keegan executives did not tell them that the majority of their assets were invested in "sup-prime, illiquid and untested investment structures."

If you or someone you know sustained substantial losses as a result of your investment in Regions Morgan Keegan bond funds, you may be eligible to join our class action lawsuit. Please fill out our online form, or call 1-800 LAW INFO (1-800-529-4636) to discuss your claim with one of our Regions Morgan Keegan class action lawsuit lawyers.