Morgan Keegan Hammered for Over $500K

Morgan Keegan & Company Incorporated has yet again been found liable to and ordered to pay a Claimant over $500,000, including interest and forum fees. These were the findings of a three member Financial Industry Regulatory Authority (FINRA) arbitration panel in Memphis, Tennessee.

The Statement of Claim in the case was filed in April 2009, asserting various causes of action including misrepresentations and omissions; breach of fiduciary duty; unsuitable investments; breach of contract; failure to supervise and violation of Tennessee Securities Statutes, among other things. Each and every one of the causes of action related to the Claimant's purchase of shares of the RMK Select High Income Fund, a proprietary fund for the firm. The Claimant requested compensatory damages in excess of $1,000,000 and naturally the Respondent, Morgan Keegan, asked that the Claimant be awarded nothing and requested that the Claimant be ordered to pay all of Morgan Keegan's attorneys' fees, costs and expert witness fees.

The highly contested hearing reached a peak on August 23, 2011, when Morgan Keegan moved for an adjournment in order to produce additional witnesses. Claimant's counsel opposed the motion and the panel denied Morgan Keegan's request. Thereafter, Morgan Keegan moved for the recusal of the entire panel and counsel for the Claimant opposed the motion. Each panel member denied the motions to recuse directed to each. The eight day evidentiary hearing concluded on August 25, 2011.

Thereafter, the panel went into executive session to consider all of the oral and documentary evidence prior to arriving at their decision. The panel concluded that Morgan Keegan was liable to and ordered to pay the Claimant $432,061 in compensatory damages, plus interest at the Tennessee legal rate per annum from April 30, 2009 until the award is paid in full. The panel also ordered Morgan Keegan to reimburse Claimant for the non-refundable portion of their filing fee in the amount of $375.

In its final act, the panel decided to split the $31,350 in forum fees of the arbitration equally between the sides, assessing each $15,675. (FINRA# 09-02550; Christian Brothers University Endowment Fund v. Morgan Keegan & Company Incorporated).

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