The Securities and Exchange Commission has notified Regions Financial Corp.’s Memphis-based subsidiary Morgan Keegan & Co. that it is investigating the firm. Regions said in a quarterly report that the SEC’s investigation focuses on auction rate securities sold and underwritten by Morgan Keegan. According to the filing, the SEC sent a so-called “Wells notice” in March. The SEC is looking at disclosures about “liquidity risks” among other things.”
The market for certain Morgan Keegan securities, whose interest rates were set through periodic bidding, collapsed when banks quit acting as a buyer of last resort at auctions. Morgan Keegan says it is preparing a response to the SEC. Morgan Keegan contends it started a voluntary repurchase program for auction bonds earlier this year that has reclaimed more than $28 million in securities from clients.
Source: Birmingham News
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