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FINRA Panels Returning Awards For Losses In Morgan Keegan Bond Fund Investments

Stung by huge financial losses in several Regions Morgan Keegan (RMK) bond funds, investors finally are getting some welcome news. Earlier this month, three separate FINRA arbitration panels announced awards in favor of investors who lost money in RMK mutual funds. 

In each of the arbitration claims, Morgan Keegan is accused of shrouding the true risks of the bond funds from investors. Instead, investors say Morgan Keegan and its management marketed and sold certain funds as relatively conservative investments, while in fact they were heavily exposed to subprime mortgage securities, collateral debt obligations (CDOs) and other risky debt instruments.  

Ultimately, several of the Morgan Keegan funds saw their value plummet as much as 90% because of the high concentration of risky and speculative debt. 

In early March 2009, two cases decided by Financial Institution Regulatory Authority (FINRA) panels returned six-figure awards to investors for their losses in Morgan Keegan funds. In one of the cases, the investors received more than the actual damages they claimed.  

Also in March, an Indiana FINRA panel awarded $18,000 to a Whitestown, Indiana, investor for losses she suffered in a Morgan Keegan bond fund. Mark E. Maddox of Maddox Hargett & Caruso served as the investor’s legal counsel. Maddox also was the attorney for the retired cattle farmer from York, Alabama, who won an earlier award from FINRA in March for losses in Morgan Keegan funds. 

In total, FINRA panels have awarded $604,000 to investors in their claims against Morgan Keegan. The Memphis-based brokerage firm also faces several class-action lawsuits from investors who say they were never made aware about the risks of certain Morgan Keegan investments.

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