Morgan Keegan Bond Funds
In 2007, countless numbers of investors suffered massive financial losses in a group of Morgan Keegan bond funds. According to lawsuits that have since been filed against Morgan Keegan, investors claim the company failed to adequately inform them about the credit risks the funds were exposed to. Recent documents regarding the funds appear to support investor claims.
Specifically, investors say the Morgan Keegan funds were marketed and sold as investments similar to corporate bonds and preferred stocks. In reality, the funds invested in high-risk derivatives and equally vulnerable securities tied to the subprime mortgage market. At the same time, the prospectuses on the Morgan Keegan funds failed to disclose the high levels of credit risk that shareholders were exposed.
When the subprime mortgage market collapsed in 2007, the RMK funds – along with investors in the funds – experienced severe financial losses.
Ultimately, six of the Morgan Keegan funds plummeted 62% on average in value, with investors losing $2 billion from March 31, 2007 to March 31, 2008. By comparison, similar bond funds posted positive returns or only modest losses. On July 29, 2008, Hyperion Brookfield Asset Management, Inc. acquired seven of the troubled bond funds from Morgan Keegan. In January 2009, Hyperion, whose brand name is Helios, announced new names for the funds to reflect the change in management. The new names are:
Helios Advantage Income Fund, Inc. (NYSE: HAV)
formerly, RMK Advantage Income Fund, Inc. (NYSE: RMA)
Helios High Income Fund, Inc. (NYSE: HIH)
formerly, RMK High Income Fund, Inc. (NYSE: RMH)
Helios Multi-Sector High Income Fund, Inc. (NYSE: HMH)
formerly, RMK Multi-Sector High Income Fund, Inc. (NYSE: RHY)
Helios Strategic Income Fund, Inc. (NYSE: HSA)
formerly, RMK Strategic Income Fund, Inc. (NYSE: RSF)
Helios Select High Income Fund (Class A Shares: HIFAX)
formerly, Regions Morgan Keegan Select High Income Fund
(Class A Shares: MKHIX)
Helios Select Intermediate Bond Fund (Class A Shares: HSIBX)
formerly, Regions Morgan Keegan Select Intermediate Bond Fund
(Class A Shares: MKIBX)
Helios Select Short Term Bond Fund (Class A Shares: MSBIX)
formerly, Regions Morgan Keegan Select Short Term Bond Fund
(Class A Shares: MSBIX)
Since early March 2009, six different investors have won significant awards from FINRA arbitration panels. In one case, an investor won $950,000.
One of the first FINRA arbitrations involving Morgan Keegan and the Morgan Keegan bond funds occurred in December 2007, when Maddox Hargett & Caruso, P.C. reached a significant settlement for a local Indiana charity.
Individual and institutional investors in Morgan Keegan bond funds may have valid claims against the investment professionals who sold or recommended certain Morgan Keegan investments. For a free initial consultation regarding your investment, contact Mark Maddox. We can evaluate your situation to determine if you have a claim.