FORT LAUDERDALE, Fla., May 25, 2009 (GLOBE NEWSWIRE) -- Regions Financial Corp.'s (NYSE:RF) Morgan Keegan unit was recently hit with more bad verdicts in FINRA arbitration cases, including an award of $285,000 to a Jackson, Mississippi Vietnam Veteran for losses relating to RMK Select Intermediate Bond Fund (MKIBX), and $75,000 to a doctor in Little Rock, Arkansas, $950,000 for an NFL star and nearly $700,000 for a Regions bank president. Morgan Keegan is the subject of numerous arbitration cases relating to over $2 billion of losses in RMK proprietary bond mutual funds managed by James Kelsoe, which funds were decimated due to risky investments in lower tranches of asset backed securities, commonly known as "toxic waste."
According to Sonn & Erez PLC, a securities law firm in Fort Lauderdale, Florida, Morgan Keegan & Company was hit with more arbitration awards, including a $285,000 arbitration award, in favor Vietnam veteran Gerald Humphries of Jackson, Mississippi, finding that Morgan Keegan violated Mississippi's Securities Act (FINRA #08-574). The award included losses, interest and attorneys fees. Moreover, another arbitration award of $75,000 was also obtained by Sonn & Erez PLC for a Little Rock, Arkansas, doctor, Duane Velez, (FINRA #08-491) who also was sold several of Regions Morgan Keegan high yield mutual bond funds managed by former Morgan Keegan employee James Kelsoe.
These latest awards comes on the heels of other arbitration awards, including a $950,000 award to former NFL star Jerome Woods (FINRA #07-357), and a nearly $700,000 award to a former Regions bank president and his brother, an insurance agent (#08-336). Like other victims, Mr. Humphries and Dr. Velez brought arbitration cases against Morgan Keegan, alleging Morgan Keegan deceptively marketed and sold Regions Morgan Keegan (RMK) branded high-yield bond mutual funds as safe, low risk investments although the funds in fact invested in risky lower tiers of structured finance which most bankers call "toxic waste." "By our count, Morgan Keegan has lost 17 out of the last 23 cases, including where they settled mid trial or post trial," said Jeff Sonn, Esq. of Sonn & Erez PLC, which firm said it represents many Morgan Keegan victims.
"We are very pleased that the arbitrators are recognizing and agree with our claims that Mr. Humphries, Dr. Velez, and others, are victims of what we believe was deceptive marketing by Morgan Keegan in the selling of their RMK proprietary bond mutual funds to our clients and others. Mr. Humphries is a Vietnam war hero who served our country honorably and deserved better," said Jeffrey Erez of Sonn & Erez, PLC who represented Mr. Humphries. Jeffrey Sonn added, "Dr. Velez' Morgan Keegan broker admitted in the arbitration hearing that he was unaware that the Morgan Keegan high yield bond mutual funds had substantial investments in risky lower tranches of asset backed securities, aka 'toxic waste,' until I had told him in the arbitration; he even sold the funds to his family without knowing the risk," said Jeffrey Sonn, Esq. who represented Dr. Velez. "We believe that many Morgan Keegan brokers were improperly used as conduits to put out false and misleading information to get their clients to purchase Morgan Keegan branded high yield bond mutual funds, managed by James Kelsoe. Mr. Kelsoe reached 'rock star' status as the RMK funds produced very high yield in the early years, before he and the Morgan Keegan funds crashed, burned, and in some cases, were liquidated due to their high concentration in toxic waste, which high risk we believe was not disseminated by Morgan Keegan brokers or advertisements given to our clients," added Sonn.
It was alleged in both the Humphries and Velez arbitration cases that Morgan Keegan helped to create and sell high yield bond mutual funds managed by former Morgan Keegan employee, James Kelsoe, that were allegedly stable high yield bond mutual funds but were in fact highly speculative due to investments in low-tiered asset backed securities, commonly called "toxic waste." Now there are hundreds of arbitration claims nationwide pending against Morgan Keegan, Reuters reported. Regions Morgan Keegan (RMK) bond mutual funds managed by James Kelsoe lost over $2 billion in 2007 and 2008.
Jeffrey Erez added, "Mr. Humphries and Dr. Velez are just two of many, many victims of these RMK bond funds sold by Morgan Keegan and we will continue to fight for these victims." Jeffrey Sonn, Esq., added, "By our count, Morgan Keegan has lost the last 17 out of 23 of the most recent arbitrations. In my opinion, this means that the arbitration panels are now almost routinely recognizing that the RMK proprietary bond mutual funds sold by Morgan Keegan and managed by James Kelsoe were mismarketed," added Sonn.
The Morgan Keegan bond funds that are the subject of hundreds of investor arbitrations include the following:
* Regions Morgan Keegan Select High Income-A, (Sym: MKHIX) * Regions Morgan Keegan Select High Income-C, (Sym: RHICX) * Regions Morgan Keegan Select High Income-I, (Sym: RHIIX) * RMK High Income Fund, (Sym: RMH) * RMK Strategic Income Fund, (Sym: RSF) * Regions Morgan Keegan Select Intermediate Bond Fund-A, (Sym: MKIBX) * Regions Morgan Keegan Select Intermediate Bond Fund-C, (Sym: RIBCX) * Regions Morgan Keegan Select Intermediate Bond Fund-I, (Sym: RIBIX) * RMK Multi-Sector High Income, (Sym: RHY) * RMK Advantage Income, (Sym: RMA) * RMK Strategic Income Fund (Sym RSF) * RMK High Income Fund (sym: RMH)
In 2008, Hyperion Brookfield announced its appointment as Advisor to certain of the RMK funds, replacing James Kelsoe. For more information on the awards, please contact Jeffrey Sonn or Jeffrey Erez at Sonn and Erez PLC.