Morgan Keegan Loses Another Rmk Select High Income Fund Case

A Little Rock, Arkansas FINRA arbitration panel has ruled that Morgan Keegan is liable and must pay investors $170,000 in compensatory damages for their losses from investing in the RMK Select High Income Fund, a proprietary fund for the firm.

The case is interesting in that the Claimants and Morgan Keegan had been negotiating to settle the case, apparently with their previous lawyer, and seemingly had done so for $18,000. On December 2, 2010, the Claimants notified the Financial Industry Regulatory Authority (FINRA) that case was settled and they wanted to withdraw their claim. However, on December 7, 2010, Claimants notified FINRA that they did not want to proceed with the settlement of $18,000 that had been offered by Morgan Keegan and that they wanted to rescind their withdrawal request. Naturally, Morgan Keegan asserted that the parties had an oral agreement to settle notwithstanding the fact that the settlement had not been memorialized in writing. Claimants said there was no enforceable oral contract and they had refused to sign the General Release and Settlement Agreement that had been sent to them by Morgan Keegan. After considering the pleadings and oral arguments of counsel, the Panel denied Morgan Keegan’s Motion to Close the Case and ordered it to proceed on the merits.

Various causes of action were asserted by the Claimants, including violations of the Arkansas Securities Act, negligence and unsuitability, among other things. After the conclusion of the evidentiary hearing, the Panel considered the evidence, both written and oral, and concluded that Morgan Keegan was liable and ordered them to pay the Claimants $170,000. In addition to the compensatory damages, the Panel assessed the entire $12,525 in forum fees of the arbitration against Morgan Keegan. (FINRA# 09-06951; David F. Fleming and Carmeletta Fleming, David F. Fleming and Carmeletta Fleming Joint Revocable Trust Account 06/06/03 and David F. Fleming IRA Account v. Morgan Keegan & Company, Inc. and Gary Aday).

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