Indiana Church Secretary Wins FINRA Award Against Morgan Keegan
Another victory has been scored for investors who lost money in Morgan Keegan & Co. bond funds. On March 12, a Financial Industry Regulatory Authority (FINRA) panel awarded Jo L. Wright, a church secretary from Whitestown, Indiana, $18,000 for losses she suffered in bond funds managed by Morgan Keegan.
For more than a year, Morgan Keegan has been the subject of numerous complaints and investigations regarding a group of open end and closed end bond funds that were invested heavily in high risk asset backed securities.
As reported in a March 19 article in the Indianapolis Star, during 2007, when the crash of the subprime mortgage market took hold, individuals who purchased shares of certain Morgan Keegan funds began to suffer big financial losses, losses that investors say could have been avoided if only Morgan Keegan had disclosed the inherent risks associated with their investments.
Wright, who lost $11,000 in the funds, served as the first Indiana case to go to an arbitration hearing, said her lawyer, Mark E. Maddox of Maddox Hargett & Caruso, in the Indianapolis Star article.
Memphis based Morgan Keegan is a division of Regions Financial Corp.
Wright’s introduction to Morgan Keegan occurred via her local Indiana Regions bank branch manager. At the time of the referral, Wright had her money in a certificate of deposit and a savings account.
On the recommendation of the bank manager and Morgan Keegan, Wright transferred her money into the Morgan Keegan Select Intermediate Bond Fund, which she believed was a safe, conservative but higher-yielding investment.
According to the FINRA complaint, Wright was never informed that the Morgan Keegan fund was considered a risky investment, nor did she ever receive a prospectus outlining any risks or details about the fund.
Wright is far from alone. Many investors contend Morgan Keegan intentionally withheld critical information about the Morgan Keegan Select Intermediate Bond Fund. Instead, management told them that any risk of principal loss was virtually non-existent and that investing in the Morgan Keegan Select Intermediate Bond Fund was appropriate for the “most conservative-minded investors.”
Ultimately, the Morgan Keegan Select Intermediate Bond Fund virtually collapsed in value because of its high concentration of holdings in collateralized debt obligations (CDOs) and other speculative investments. The losses in the fund, as well as other Morgan Keegan funds, have since spawned a wave of securities litigation and arbitration claims, with regulators continuing to look into the cause of the funds’ meltdown.
Our affiliation of lawyers is actively involved in advising individual and institutional investors in evaluating their legal options when confronted with subprime and other mortgage related investment losses.
