Morgan Keegan & Co., the stock brokerage unit of Regions Financial Corp., has been involved in a great deal of litigation brought by investors who were victims of fraud. The company has spent the past ten months fighting these claims. Unfortunately for Morgan Keegan, there appears to be no letup in sight. At the heart of the current disputes are seven investment pools operated by Morgan Keegan, all of which operated under some variation of the name “RMK Fund.” These were mutual funds that invested in bonds. Investors who were hurt contend that these were risky bonds that speculated on the odds that people and companies with bad credit ratings would pay their high-interest debts such as equipment leases and home mortgages.
Morgan Keegan stockbrokers led their clients to believe the funds contained safe, highly-rated corporate bonds suitable for retirees. Some of the funds lost more than half their value when the housing market got in deep trouble in 2007, leaving investors with more than $2 billion in losses that year. Currently, there are hundreds of cases pending against Morgan Keegan over the funds.
Morgan Keegan and Regions claim there was nothing improper about the management, promotion or selling of the funds. They say the assets that backed the funds were entirely proper given the prevailing economic conditions and that the risks were properly disclosed. But our experience in handling cases against Morgan Keegan and Regions indicates otherwise. We believe the cases brought by our clients have merit and will be successful.
The Morgan Keegan disputes are handled in arbitration under the Financial Industry Regulatory Authority (FINRA) which is based in Washington. FINRA is authorized by the government as a “self regulatory” organization, meaning its members agree to abide by certain rules and accept whatever penalties are levied by the group if these rules are broken. Investor disputes are heard in arbitration by a three-person panel. The panel is chosen from a pool of people by mutual consent of the lawyers representing aggrieved investors and the lawyers representing the FINRA-member company. There were about 5,000 claims filed against FINRA members last year. If you need more information on this subject, contract Scarlette Tuley or Jay Aughtman at 800-898-2034 or by email at Scarlette.Tuley@beasleyallen.com or Jay.Aughtman@beasleyallen.com.
Source: Birmingham News
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