Investment Fraud Lawyer Blog

Morgan Keegan has been aggressively fighting an array of regulatory actions and investor claims. As a result of these "hardball" defense tactics, Morgan Keegan's legal costs have doubled and are consuming a significant chunk of the firm's revenue as a result of investigations by securities regulators and legal actions by aggrieved investors, according to an Feb. 25 article in InvestmentNews by Bruce Kelly.

Continue reading "Morgan Keegan's Legal Costs Soar Under an Avalanche of Claims" »

A Memphis, Tennessee Chancery court has vacated an award in favor of an investor that was issued by a FINRA arbitration panel in a Morgan Keegan bond fund case. Vacatur of an arbitration award is highly unusual, and should not occur without proof of some corruption in the process, such as evident partiality of an arbitrator. The reason given by the Tennessee court was that two of the arbitrators were “biased” because they had previously ruled against Morgan Keegan in another Morgan Keegan bond fund case.

Continue reading "Tennessee State Court Ruling Undermines Securities Arbitration" »

An Illinois-based pension fund has brought a shareholder’s derivative action seeking to recover billions of dollars in executive compensation paid by Goldman Sachs. This could be the first of many such suits, reported James Armstrong of Law360, “Goldman Pay Suit Could Signal New Wave of Litigation,” Jan. 8, 2010.

Continue reading "Institutional Investors Are Fed Up With Wall Street Pay Excesses Too" »

The Wall Street Journal reports that “hundreds of businesses are fighting to recover billions of dollars tied up in frozen auction-rates securities, a year after Wall Street firms agreed to $60 billion in settlements over the collapsed market for the investments.” See “Firms Fight Banks Over Billions in Frozen Notes,” WSJ 1/2/10. While regulators stepped in to help individual investors after the auctions froze in February 2008, many corporate and institutional investors did not benefit from settlements between banks, broker-dealers and the SEC, FINRA and state attorneys general. According to Atlanta attorney Craig T. Jones, investors were left holding about $330 billion in illiquid securities when the auctions froze, so $60 billion in settlements is only a drop in the bucket.”

Continue reading "The Auction Rate Securities Debacle Continues - Corporate America Takes on Wall Street" »

There have been various developments over the past several weeks which investors may consider relevant in allocating their resources or evaluating alternatives that are available to them. Some of the more significant developments include, but are not limited to, the following:

• The Dow Jones Industrial Average opened the week at 9820 and, on Monday, fell 41 points.

• On Tuesday, the Dow Jones Industrial Average rebounded 51 points.

• On Wednesday, the Dow Jones Industrial Average dropped 81 points.

• On Thursday, the Dow Jones Industrial Average fell another 41 points.

• On Friday, the Dow Jones Industrial Average lost 42 points and closed the week at 9665.

Continue reading "Page Perry's Market Monitor - September 25, 2009" »

Regions Bank has agreed to pay $1 million to settle investment fraud charges brought by the Securities and Exchange Commission, according to a September 21 article by AP Legal Affairs writer Curt Anderson. On September 21, the SEC issued a Cease-and-Desist Order finding that Regions, the primary banking subsidiary of Regions Financial Corporation, was a cause of U.S. Pension Trust Corp.'s and U.S. College Trust Corp.'s (collectively, USPT) violations of federal securities laws.

Continue reading "Regions Bank's SEC Problems Grow" »

In her August 4th Wall Street Journal column called Compliance Watch, Suzanne Barlyn reports that Morgan Keegan is engaging in a rarely used hardball tactics in three arbitrations arising out of sales of its proprietary bond mutual funds in which arbitration panels have awards. So far, Morgan Keegan has moved to vacate awards issued in three cases involving more than $1 million in damages, attorneys’ fees and costs.

Continue reading "Morgan Keegan Continues "Hardball" Arbitration Tactics" »

"For nothing is hidden that will not become evident, nor anything secret that will not be known and come to light.” Thus hinteth today’s Wall Street Journal article by Suzanne Barlyn entitled “COMPLIANCE WATCH: SEC Warning May Help Unhappy Investors.”

The United States Securities and Exchange Commission (the “SEC”) Staff’s warning that it intends to recommend an enforcement action against Morgan Keegan for possible violations of the federal securities laws may incline more arbitrators to require Morgan Keegan to disclose documents it supplied to the SEC in its investigation, but wants to keep hidden from investors and arbitrators, according to the article. Here is the background.

Continue reading "It's Time for Arbitrators to Grant Investors Access to the SEC Evidence that Morgan Keegan Is Trying to Hide" »

The Securities Industry and Financial Markets Association, an important Wall Street lobbying group, has decided to support the Obama administration’s proposal to hold brokers to the same standard as a fiduciary when they provide investment advice, according to a recent report in The Wall Street Journal. While investors who sue their brokers have long argued, with considerable success, that a fiduciary duty arises whenever there is a relationship of trust and confidence between broker and investor, that determination is presently made on a case by case basis under laws that vary from state to state. A federal standard, which is more likely to pass now that it has been endorsed by the industry, would make it easier for investors to prevail in claims against brokers.

Continue reading "Wall Street Trade Association Supports Fiduciary Standard" »

On July 21, 2009, the Securities and Exchange Commission (“SEC”) filed a Complaint against Morgan Keegan & Company, Inc. in the United States District Court for the Northern District of Georgia for misleading investors about the liquidity risks of auction rate securities that it sold. Morgan Keegan sold approximately $925 million of auction rate securities between November 1, 2007 and March 20, 2008 after it knew the market for such securities was deteriorating and it had decided to stop supporting the market, according to the SEC. The Complaint alleges that Morgan Keegan’s sales practices violated the anti-fraud provisions of the United States securities laws, and seeks an order directing Morgan Keegan to stop violating those laws, repurchase all auction rate securities it sold before March 20, 2008, disgorge all ill-gotten gains or unjust enrichment it has enjoyed as a result of its unlawful activities, and pay civil monetary penalties pursuant to federal statutes.

Continue reading "SEC Charges Morgan Keegan with Fraud in the Sale of Auction Rate Securities" »

On July 9, 2009, Morgan Keegan & Company, Inc. (“Morgan Keegan”) (a wholly-owned subsidiary of Regions Financial Corporation), Morgan Asset Management, Inc. and three employees, each received a “Wells” notice from the Staff of the Atlanta Regional Office of the United States Securities and Exchange Commission (the “SEC”) stating that the SEC Staff intends to recommend that the SEC bring enforcement actions for possible violations of the federal securities laws. The potential actions relate to the SEC’s investigation of certain mutual funds formerly managed by Morgan Keegan and Morgan Asset Management. Morgan Keegan received another Wells Notice earlier this year related to its unlawful sales practices in connection with sales of auction rate securities.

Continue reading "SEC Notifies Morgan Keegan of Intent to Recommend Enforcement Action Involving Toxic Mutual Funds" »

A new wave of lawsuits and arbitrations are being filed on behalf of investors who purchased auction rate securities but have not been eligible to participate in redemptions offered by big banks as a result of regulatory settlements. See article entitled “’Stranded’ ARS investors sue for a share of pie” by Jed Horowitz in the May 24, 2009 edition of InvestmentNews. These stranded investors purchased auction rate securities from “downstream” broker-dealers who sold but did not underwrite auction rate securities. The firms include Raymond James Financial Inc., Oppenheimer Holdings Inc., E*Trade Financial Corp., and TD Ameritrade Holding Corp., which were among the biggest distributors of auction rate securities, according to the article.

Continue reading "Investors Left Out of the Auction Rate Securities Regulatory Settlements Are Suing to Recover Losses" »

Evergreen Investment Management Company (“Evergreen”), a unit of Wells Fargo & Co., has agreed to pay more than $40 million to settle an enforcement action by the Securities and Exchange Commission (“SEC”) and the Massachusetts Securities Division, according to articles in the Wall Street Journal and Reuters. Evergreen was a subsidiary of Wachovia at the time of the violation, according to Reuters.

Continue reading "Evergreen Pays Over $40 Million to Settle SEC Charges that it Overvalued Mortgage-Backed Investments" »

The SEC has taken action that should send shivers up the spines of many of Wall Street investment banks. The SEC recently charged 10 brokers associated with the now-defunct Brookstreet Securities Corp. (out of Irvine, California) with fraud for falsely marketing investments in complex derivative securities backed by mortgages as safe and suitable for retirees and as appropriate for those with conservative investment goals. In particular, the defendants portrayed risky collateralized mortgage obligations as safe investments to more than 750 customers. The customers subsequently incurred over $35 million in losses investing in these “low risk” investments. Seven of the ten brokers were based in West Palm Beach, Florida, and the others were based in Hawaii, Oregon, and Montana. FINRA, the Financial Industry Regulatory Authority, has brought a similar complaint alleging fraud against six other former Brookstreet brokers.

Continue reading "Is the SEC Willing to Sue the "Big Boys" for Misleading the Public Regarding the Risks of Structured Finance Securities?" »

The news just doesn’t seem to be getting any better for Regions Financial Corp. An Alabama Judge recently filed a shareholder derivative suit in Jefferson County Alabama against the top executives and board of directors of Regions Financial Corp. The suit alleges that the defendants’ mismanagement led to the huge losses suffered by the company and its shareholders.

Continue reading "Alabama Judge Files Shareholder Derivative Action Against Regions' Executives" »

On May 13, 2009, the U.S. Securities and Exchange Commission (“SEC”) approved a rule change that requires brokers to disclose alleged sales practice violations made by a customer against a securities broker in the body of a civil lawsuit or arbitration claim, even if that broker is not named as a defendant or respondent. The SEC received a total of 1,654 comment letters on the proposed rule change. Approximately 1,451 of the letters were “form letters” from financial advisors and insurance agents (who sell insurance products such as variable annuities) opposing the change.

Continue reading "Regulators Require Financial Firms to Provide More Public Disclosure Regarding Customer Complaints" »

Morgan Keegan's problems seem to keep growing. Already facing massive claims over its sale of toxic bond funds, the company is now being confronted with auction rate securities problems. According to an article published by Reuters, the SEC may begin a civil proceeding against the Morgan Keegan & Co brokerage unit of Regions Financial Corp. over the alleged improper sale of auction-rate securities.

Continue reading "Auction Rate Securities - Morgan Keegan's Latest Problem" »

Morgan Keegan recently suffered two more arbitration losses related to its collapsed bond funds. On April 23, 2009 an arbitration panel in Alabama awarded two investors compensatory damages totaling over $76,000 as well as an award of costs in connection with losses they suffered as a result of an investment in the Morgan Keegan bond funds. Four days later, an arbitration panel in Kentucky awarded an investor in the Morgan Keegan funds $67,860 in compensatory damages, $16,828 in interest and $30,428 in attorneys’ fees.

Continue reading "Morgan Keegan Loses Two More Toxic Bond Fund Cases" »

On March 11, 2009, an Alabama Financial Industry Regulatory Authority (FINRA) arbitration panel awarded Phillip Willingham and Melinda Oates $187,000 for their claim against Memphis-based Morgan Keegan. Morgan Keegan later asked the FINRA Panel to correct its award, which was amended and clarified by the Panel on April 14, 2009. The newly amended award finds that Morgan Keegan is liable to the claimants for the same $187,000, which it allocated as $100,000 in compensatory damages, $25,000 in costs, and $62,000 in attorney fees.

Continue reading "Investor Awarded Losses, Costs and Attorneys Fees in Morgan Keegan Bond Case" »

Morgan Keegan recently suffered it sixth straight loss in arbitration related to its collapsed bond funds. Jerome Woods, who played defensive back for the Kansas City Chiefs, recently received an arbitration award of $950,000 in connection with losses he suffered as a result of an investment in the Morgan Keegan bond funds. A review of the award also indicates that one of the arbitrators on the panel felt compelled to file a dissenting opinion indicating the evidence supported an even greater monetary award. The award to Mr. Woods brings the total awarded to investors harmed by the funds to a total of more than $1.6 million over the past two months.

Continue reading "Morgan Keegan Hit for $950,000 Loss on Toxic Bond Fund Case" »