Legal expenses have skyrocketed for Morgan Keegan & Company, the Memphis-based broker that has been the subject of countless lawsuits and arbitration claims over losses suffered by investors in several Morgan Keegan bond funds. The funds plummeted in value due to investments in toxic mortgage-related securities.
As reported Feb. 25 by Investment News, Morgan Keegan’s legal bills equaled 12% of the firm’s total revenue last year. That’s double from 2008. In total, the company spent more than $160 million in “professional and legal fees” last year on revenue of $1.28 billion, according to the Investment News article.
Recent big wins for investors have added to Morgan Keegan’s growing legal fees. Earlier this month, an arbitration panel of the Financial Industry Regulatory Industry Authority (FINRA) ruled against Morgan Keegan, awarding separate claims of $2.5 million and $1.1 million to investors.
Adding to Morgan Keegan’s legal woes has been ongoing scrutiny from securities regulators. The Securities and Exchange Commission (SEC) and FINRA both recently issued Wells Notices to Morgan Keegan, a move indicating that disciplinary action could be in the company’s future. In the SEC filing, the action stemmed to the group of Morgan Keegan bond funds. Another Wells notice was filed in connection to auction rate securities sales.
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