Investors to Receive Some Compensation from Morgan Keegan Regulatory Settlements


Morgan Keegan & Company and Morgan Asset Management have agreed to pay $200 million to settle fraud charges related to proprietary bond mutual funds that were both mispriced and loaded with risky subprime mortgage-backed securities. Approximately 39,000 investors lost $1.5 billion in the RMK bond funds (later renamed Helios) that were the focus of the charges.

Simultaneously, Regions Financial Corp., the parent company of Morgan Keegan, announced that it has engaged Goldman Sachs to “explore strategic alternatives” for Morgan Keegan, thereby signaling that it is for sale. Ever since the fraud charges were made by regulators, rumors had swirled that Regions was looking to divest itself of a troubled Morgan Keegan.

Under the settlement, Morgan Keegan is required to pay $25 million in disgorgement and interest and a $75 million penalty to the SEC to be placed into a Fair Fund for the benefit of investors harmed by the violations. Morgan Keegan will pay $100 million into a state fund that also will be distributed to investors.

The details of how the settlement funds will be paid to injured investors have not been finalized. A distribution plan will be administered pursuant to SEC rules. A fund administrator will be appointed by the SEC, who will evaluate investor claims and propose and effectuate a distribution plan to compensate injured investors for their loss. A similar fund will be administered by a representative designated by the state agencies of Alabama, Kentucky, Mississippi, Tennessee, and South Carolina.

The settlement agreement specifically provides that Morgan Keegan is not (and is prohibited from arguing that it is) entitled to any offset or reduction of any award of compensatory damages in any related investor action for penalties paid pursuant to the settlement of the regulatory action.

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 45 occasions. Page Perry’s attorneys have extensive experience in representing investors in cases involving Morgan Keegan. For further information, please contact us.