Huge financial losses in a group of troubled Morgan Keegan & Co. bond funds affected thousands of investors, including former Chicago Bulls NBA star Horace Grant. In 2009, arbitrators awarded Grant $1.46 million for his losses in the funds. Since then, however, he’s been waging an ongoing court battle to thwart Morgan Keegan’s attempts to overturn the ruling.
Grant and other former Morgan Keegan clients contend the firm owes them millions of dollars after a group of its bond funds suffered massive losses in 2007 and 2008. The brokerage has faced more than 1,000 investor arbitration cases, as well as paid a $200 million civil regulatory fine.
As reported Oct. 15 by the Chicago Tribune, Morgan Keegan is fighting to overturn some of these awards to investors, including Grant’s. Other cases are still in the process of arbitration.
Investors and their lawyers say Morgan Keegan promoted the group of bond funds as safe, even though they had invested in highly risky mortgage-backed securities. The funds ultimately lost as much as 80% of their value following the implosion of the housing market.
Regulators have since alleged that one-time Morgan Keegan fund manager James Kelsoe deliberately inflated the value of the securities. Kelsoe later agreed to pay $500,000 in penalties and be barred from the securities industry by the Securities and Exchange Commission (SEC).
A decision in the Grant case is likely months away. Meanwhile, the former NBA player remains puzzled as to why he must continue to fight a legal battle after Morgan Keegan has paid a fine to regulators over the funds in question and one of its star fund advisers – Kelsoe – was barred from the industry altogether.
Grant noted in the Chicago Tribune article that he has been able to cash in other investments to pay his living expenses, but that other Morgan Keegan customers might not be so fortunate.
“Someone 65 or 70 years old has to go back to work because of Morgan Keegan,” Grant said in the story.