Morgan Keegan Gets Popped for $555,400
A Financial industry Regulatory Authority (FINRA) arbitration panel in Houston sided with the Claimants and ordered Morgan Keegan & Company, Incorporated to pay them $555,400 in compensatory damages.
The Statement of Claim in the case was filed in June 2009, asserting various causes of action including violation of the Texas Securities Act, violation of the Texas Deceptive Trade Practices Act, violation of NASD Conduct Rules, negligence, misrepresentation, failure to supervise and vicarious liability, among other things. All of the causes of action related to the recommendation and sale of various proprietary mutual funds including Regions Morgan Keegan High Income Fund, Regions Morgan Keegan Advantage Income fund, Regions Morgan Keegan Multi-Sector High Income Fund and Regions Morgan Keegan Strategic Income Fund. It was alleged that these funds were marketed and sold as being conservative and diversified funds that would provide a higher rate of return without increased risk. In fact, the funds were concentrated in high risk mortgage backed securities, speculative and not in the best interest of the Claimants, according to the award.
Following a five (5) day evidentiary hearing, the panel went into executive session to consider all of the oral and documentary evidence presented prior to rendering its decision. The panel concluded that Morgan Keegan was liable and ordered them to pay the WCR Family Limited Partnership the sum of $555,400 in compensatory damages; it also ordered Morgan Keegan to pay interest on the $555,400 at a rate of 4% per annum from July 29, 2011 until the award was paid in full; the panel concluded that all claims brought by the Wilhelmina R. Smith Estate were denied and dismissed. Additionally, the panel split the $18,900 in forum fees for the arbitration between the parties as follows: $4,725 was assessed against the WCR Family Limited Partnership, $4,725 was assessed against the Wilhelmina R. Smith Estate and $9,450 was assessed against Morgan Keegan & Company. (FINRA# 09-03627; Carroll R. Ray, on behalf of WCR Family Limited Partnership and the Wilhelmina R. Smith Estate v. Morgan Keegan & Company, Incorporated).