Morgan Keegan Fraud Results In Biggest FINRA Award To Date
Investors keep scoring big in arbitration claims involving Morgan Keegan fraud. The latest win is by Jerome Woods, a former professional football player for the Kansas City Chiefs who just cinched a $950,000 arbitration award as a result of his claim with the Financial Industry Regulatory Authority (FINRA) against Memphis-based Morgan Keegan.
The decision in favor of Woods is FINRA’s largest award to date related to claims by investors for the financial losses they suffered in a group of Regions Morgan Keegan (RMK) mutual bond funds.
As in the majority of arbitration claims against Morgan Keegan, the basis of Woods’ complaint focused on the bank’s mismanagement of his investments, as well as Morgan Keegan’s failure to disclose the risks associated with various RMK bond funds. Specifically, the funds contained a high concentration of securities linked to risky subprime mortgages, loans and other speculative debt, a fact that investors say fund managers intentionally kept hidden.
Investors who purchased the Morgan Keegan bond funds in question initially thought they were getting a diversified portfolio of relatively conservative corporate bonds and preferred stocks. Later, however, a compendium of evidence would reveal that neither Morgan Keegan’s management nor the informational documents on the funds accurately portrayed the true level of credit risk investors had taken on. It was only after the RMK funds plummeted by more than 60% on average in value that investors finally learned that Morgan Keegan had purchased high-risk, low-priority tranches of toxic collateralized debt obligations (CDOs).
Ultimately, Morgan Keegan’s misguided decisions caused investors to lose $2 billion from March 31, 2007 to March 31, 2008.
The massive financial losses have since spurred a wave of investor lawsuits and arbitration claims against Morgan Keegan. In addition to FINRA’s $950,000 award to Woods, other recent investor arbitration wins include $100,000 to Memphis sports broadcaster Tim McCarver; $267,711 plus interest to two California brothers; $187,215 to an Alabama retired couple; and$18,000 to Jo L. Wright, an Indiana church secretary. Investors in the latter two cases were represented by Maddox Hargett & Caruso.
Our affiliation of securities 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.
