On March 11, 2009, an Alabama Financial Industry Regulatory Authority (FINRA) arbitration panel awarded Phillip Willingham and Melinda Oates $187,000 for their claim against Memphis-based Morgan Keegan. Morgan Keegan later asked the FINRA Panel to correct its award, which was amended and clarified by the Panel on April 14, 2009. The newly amended award finds that Morgan Keegan is liable to the claimants for the same $187,000, which it allocated as $100,000 in compensatory damages, $25,000 in costs, and $62,000 in attorney fees.
The confirmation of the award continues the string of bad news for Morgan Keegan. The total amount awarded to investors harmed by the funds now totals more than $1.6 million over the past two months. Among the most recent arbitration awards: $950,000 to Jerome Woods, a former football player for the Kansas City Chiefs; $100,000 to sports broadcaster Tim McCarver; $267,711 plus interest to two California brothers; and $18,000 to an Indiana church secretary. The recent awards seem to indicate that the arbitration panels hearing these cases have begun to fully appreciate the misconduct that Morgan Keegan engaged in while pushing the sale of the toxic bonds.
Hundreds of investors have filed lawsuits and arbitration claims against Morgan Keegan because of the fraud associated with the bond funds, many of which have lost more than 90% of their value since mid-2007. According to Pratt H. Davis of Page Perry in Atlanta, “The recent awards confirm our view that the funds contained extraordinary risks that were not disclosed to investors. The risk of the collapse of the funds was clear to Morgan Keegan when it sold the funds as the funds investments were highly concentrated in the lower level “tranches” of ultra-risky structured finance products such as collateralized debt obligations, collateralized mortgage obligations and other asset-backed securities, many of which were directly tied to sub-prime mortgages.”
When the housing market begin to decline, the funds began to implode. “The funds were sold as “diversified” but were in actuality a highly leveraged bet on the real estate industry” says Davis. Ultimately, the overexposure to those products cost investors more than $2 billion in losses.
Page Perry is an Atlanta-based law firm with over 125 years collective experience representing investors in securities-related litigation and arbitration. While past results are not indicative of future success, Page Perry’s attorneys have recovered over $1,000,000 for clients on more than 30 occasions. Page Perry’s attorneys are actively involved in representing investors in securities cases. For further information, please contact us.