Complaint filed against Regions subsidiary Morgan Keegan & Co.
Financial regulators have filed a complaint against Morgan Keegan & Co. alleging the firm misled investors about some bond funds, officials announced today during a news conference at the Mississippi Capitol.
The Financial Industry Regulatory Authority (FinRA) estimates the company’s “false and misleading” sales tactics cost investors more than $1 billion.
Morgan Keegan is a Memphis-based investment firm that is a subsidiary of Regions Financial Corp., based in Birmingham.
Regulators allege the company sold $2 billion in bonds from Jan. 1 2006 to Dec. 31, 2007, that included mortgage-backed securities, including sub-prime loans. Those investments “to experience serious financial difficulties beginning in early 2007 and led to their collapse later that year.”
In the complaint, FinRA suggests the company’s sales material failed “to disclose this to customers or that a substantial portion of the bond funds’ portfolios were acutely affected by then-current economic conditions.”
In addition to an unspecified fine, FinRA is seeking the company pay back profits from the alleged misdeeds and restitution to affected investors.
The complaint was the result of a multi-state investigation by the Mississippi Secretary of State, the Alabama Securities Commission, the U.S. Securities and Exchange Commission and FinRA.
Clarion-Ledger
4/7/10
