Morgan Keegan Fraud Woes Continue
Morgan Keegan has become the achilles’ heel of its parent company, Regions Financial Corporation (RF), based in Birmingham, AL. Six mutual funds managed and sold by Morgan Keegan to its customers lost roughly $2 billion in value from March 31, 2007 to March 31, 2008. The funds involved include the Select Intermediate Bond Fund; Select High Income Fund; RMK High Income Fund; RMK Strategic Income Fund; RMK Advantage Income Fund; and the RMK Multi-Sector High Income Fund. Although depicted as being different, the performance of each fund was essentially the same, producing massive losses for investors who had been told the funds were safe. The result is Regions Financial Corporation's sixth loss in seven quarters for the second quarter of 2010 caused by a $200 million charge reflecting an "estimate of probable loss" from settlements with investors over the bond funds managed by Morgan Keegan.
Back on April 7, 2010, the Securities Exchange Commission (SEC), Financial Industry Regulatory Authority (FINRA), Mississippi, Alabama, Kentucky and South Carolina launched an investigation over the six mutual funds sold by Morgan Keegan. The investigation singled out four Morgan Keegan employees and requested that they be barred from the securities industry. They were James Kesoe, Jr., Manager of the six funds; Gary Stringer, Investment Director for the firm's Wealth Management Services; Brian Sullivan, President and Chief Investment Officer of Morgan Asset Management and Michele Wood, Chief Compliance Officer for the funds and Morgan Asset Management and Senior Attorney and First Vice President of Morgan Keegan. The culmination of this multi-state investigation will be an administrative hearing on October 5, 2010 at the offices of Joseph P. Borg, Director Alabama Securities Commission in Montgomery, AL.