SEC Could Take Civil Action Against Morgan Keegan
Business headlines are reporting the same story: Morgan Keegan, the brokerage arm of Regions Financial Corp., may face a civil lawsuit by the Securities and Exchange Commission (SEC) over the collapse of several mutual bond funds formerly managed by the Memphis-based firm. On July 15, Regions Financial acknowledged that the Atlanta office of the SEC had served a Wells Notice on Morgan Keegan, Morgan Asset Management and three unidentified employees.
“We knew it was just a matter of time before the SEC and probably other state regulators (brought) the hammer down,” said Indianapolis attorney Mark Maddox in a July 16 article appearing in the Memphis Daily News. Maddox is one of dozens of attorneys who has won arbitration cases against Morgan Keegan for investor losses in the mutual funds.
A Wells Notice is a letter issued by the SEC that advises a company or a person of the possibility of pending civil charges by the regulator. The letter itself outlines various violations that the SEC is contemplating and gives the company or the person receiving the notice a chance to argue against the potential action.
The Wells Notice concerning Morgan Keegan likely focuses on a group of proprietary mutual bond funds that plummeted in value following the onset of the mortgage loan crisis. The funds, known as the “RMK Funds,” contained large concentrations of lower-level tranches of risky structured finance products, including collateralized debt obligations (CDOs). Because of those risky holdings - a fact investors allegedly were never made aware of by Morgan Keegan’ s management - several of the funds lost 90% and more of their value in 2007.
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.
