Claims are being arbitrated through the Financial Industry Regulatory Authority (FINRA)… against Memphis-based brokerage Morgan Keegan (a subsidiary for Regions Bank) for losses sustained as a result of investments in certain bond funds that were aggressively promoted by the company. One example include a $1.4 million settlement that was awarded to Mr. Horace Grant, a basketball player who suffered losses due to the fact that he invested his money with Regions Morgan Keegan bond funds; and an award of $950,000 was given to football player, Jerome Woods, on behalf of a FINA arbitration panel. Many other cases were settled through FINA, as well many consumers, compensated for the money they invested. These funds were a proprietary product of Morgan Keegan, and could not be held in or transferred to accounts outside of Morgan Keegan or its affiliates. In handling the accounts this way, Morgan Keegan ensured they would earn the considerable fees that were solely based on the average of daily assets of the investment funds, as well as receive commissions if they sold the funds.
Morgan Keegan told its customers that their investments were safe and that they would receive high income with a low risk rate. But in reality, the funds invested were bait for risky collateralized debt obligations backed by subprime loans. The majority of the funds’ holdings were in the high risk asset-backed securities, contrary to Morgan Keegan’s marketing materials and SEC filings. Unfortunately, as we know, these were dangerous investments. In 2008, the investment funds began to lose their value but Morgan Keegan assured their customers that their investments would grow, but they needed to just hang in there. But, Morgan Keegan knew full well the funds were decreasing and that many were about to lose their investments. Many investors lost a substantial portion of their life-savings due to fraudulent mismanagement of these funds.