The Securities and Exchange Commission’s Enforcement Division has launched a second probe of Morgan Keegan regarding proprietary bond funds. This subsequent investigation began just a week after the SEC in April started a high-profile administrative proceeding against Morgan Keegan’s asset management unit and two of its senior employees, accusing them of fraudulently overstating the value of certain mortgage-backed securities. Morgan Keegan, which is contesting the SEC’s charges, complained to an administrative law judge that, among other things, the SEC’s case would continue to evolve if there was a supplementary investigation, forcing them “to shoot at a moving target” while working on the SEC’s already strict time limits.
The SEC was not ordered to stop its second investigation into Morgan Keegan. Instead, the judge ordered them to wall off this investigation from the initial case, prohibiting lawyers or staff from working on both cases. The initial case is slated to get underway in September. The judge did allow the staff to share documents and transcripts from the second investigation with the staff prepping the initial case, provided that they grant Morgan Keegan simultaneous access to the same information.
Despite these restrictions it is doubtful the SEC will give up its second probe. It appears that Morgan Keegan may be forced to answer two rounds of charges from the SEC. This is good news for damaged investors who are desperate for restitution of their lost savings. If you need more information on this subject or on the Morgan Keegan litigation, contact Scarlette Tuley, a lawyer handling this litigation for our firm, at 800-898-2034 or by email at Scarlette.Tuley@beasleyallen.com.
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