Archive for September, 2009

Former Los Angeles Lakers player Horace Grant scored a big win on Sept. 11 when the Financial Industry Regulatory Authority (FINRA) ordered Regions Financial Corp.’s Morgan Keegan & Co. to pay Grant $1.46 million for losses he incurred as an investor in the brokerage’s risky bond funds.

The $1.46 million award is the largest arbitration loss to date for Morgan Keegan, which has hundreds of lawsuits still pending in connection to a group of mutual funds that collapsed during the height of the financial crisis. The funds in question include Regions Morgan Keegan Multi-Sector Income Fund, Regions Morgan Keegan High Income Fund, Regions Morgan Keegan Strategic Income Fund, and Regions Morgan Keegan Advantage Income Fund.

According to Grant’s complaint, Morgan Keegan failed to disclose the true risks of his investments, which were underpinned by mortgage-related holdings.

Grant’s win comes on the heels of several other recent victories by investors with claims against Morgan Keegan for losses in the bond funds. At least seven of the awards have cost Morgan Keegan about $3 million. One investor won $950,000 and two other investors were awarded $267,711 and $187,215, according to FINRA records.

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.

Bruce Sherman, co-founder of Private Capital Management LP, is suing Bear Stearns Cos., its former chief executive officer James Cayne, Warren Spector, former co-president and chief operating officer, and the auditing firm of Deloitte & Touche for allegedly overstating the value of Bear’s mortgage-backed and asset-backed securities and the quality of its risk management.

As reported Sept. 25 by the Wall Street Journal, the lawsuit claims that Cayne and others at New York-based Bear Stearns misled and misrepresented facts to investors about the firm’s financial health prior to its Federal Reserve-forced sale to JPMorgan Chase & Co. in March 2008.

“[The] defendants knew that the market and the financial press would view Sherman’s sale of his Bear stock as a loss of confidence in Bear by a well-known and long-standing investor,” the lawsuit said.

“This, in turn, would have undermined confidence in Bear’s management at a critical time when Bear’s liquidity and Bear’s valuation of its assets were open to question following the implosion of two Bear-sponsored hedge funds in the summer of 2007.”

At one time, Sherman was Bear Stearns’ largest stockholder, owning a 5.9% stake, or 5.5 million shares valued at more than $475 million before falling to nearly zero when Bear collapsed. Sherman eventually sold his stake at a huge financial loss and retired from PCM, which is a unit of Legg Mason.

In March 2008, Bear Stearns was sold to JPMorgan Chase for $1 billion. Only two months earlier, the investment firm had a market value of $20 billion.

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.