Consulting Services Group Sues Morgan Keegan

Consulting Services Group (CSG) is the latest investor to sue Morgan Keegan & Co. for losses suffered in several collapsed RMK funds. CSG filed its lawsuit on Dec. 22, naming Morgan Keegan, Morgan Asset Management, parent company Region Financial Corp., and James Kelsoe, former manager of the Morgan Keegan funds, as defendants. 

CSG’s complaint mirrors other lawsuits filed by hundreds of individual and institutional investors against Morgan Keegan and the bond funds. Among the laundry list of illegal actions that CSG cites in its lawsuit: Misrepresentation and suppression, fraudulent concealment, breach of fiduciary duty, intentional interference with business relationships and “negligent supervision and conspiracy in the underwriting, marketing and management” of the RMK Funds.

In addition, CSG alleges that Morgan Keegan and Kelsoe used “misrepresentation” and “fraudulent concealment” to keep CSG and its clients invested in the RMK funds even after Morgan Keegan reportedly knew the investments had become risky and were plummeting in value. 

“A complete collapse of the funds in the current market was only a matter of time,” the lawsuit reads. “By March 2008, the damage was done: All six of the (RMK) funds collapsed, causing many of CSG’s clients to lose most, if not all, of their investment.”

Losses in the Morgan Keegan funds have been significant, ranging from 51% to 86%.  Between March 2007 and March 2008, the funds lost $2 billion of their value. 

The six funds in question include the Regions Morgan Keegan Select High Income Fund, the Regions Morgan Keegan Select Intermediate Bond Fund, RMK High Income Fund Inc., RMK Strategic Income Fund Inc., RMK Advantage Income Fund Inc. and the RMK Multi-Sector Fund.

As reported Dec. 22 by the Memphis Business Journal, 78 cases involving the Morgan Keegan funds have been heard by arbitration panels with the Financial Industry Regulatory Authority (FINRA). Claimants in those cases have received approximately $7.6 million in awards. 

Memphis-based CSG provides investment advice to institutions, foundations, pension funds and wealthy investors. 

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.

This entry was posted on Friday, January 1st, 2010 at 7:15 pmand is filed under Bond Funds, Morgan Keegan Bond Funds. You can follow any responses to this entry through the RSS 2.0 feed. You can skip to the end and leave a response. Pinging is currently not allowed.