ST. LOUIS, May 8, 2009 (GLOBE NEWSWIRE) -- A Saint Louis, Missouri FINRA arbitration panel yesterday awarded a Missouri resident her full losses, attorney fees, statutory interest, costs and $50,000 in punitive damages for purchases of Region Financial Corp.'s (RF) brokerage firm subsidiary Morgan Keegan's proprietary bond funds managed by James C. Kelsoe. The award was the first against Morgan Keegan for punitive damages in the country. According to attorney Andrew Stoltmann, who represented the investor in the arbitration claim, "The award of punitive damages, along with the client's losses, attorney fees, costs and interest, is the clearest sign yet that arbitrators are repulsed by Morgan Keegan's fraudulent actions with respect to the firm's mutual funds. Morgan Keegan has now lost 14 of the last 16 arbitration cases tried against the firm and it is becoming clear to everyone that the firm took advantage of thousands of clients by selling derivative laced, toxic mutual funds."
The client's net losses were $51,304. The Panel awarded the Claimant $51,304 in compensatory damages, $50,000 in punitive damages, $35,783 in attorney fees, $8,000 in expenses and $6,154 in statutory interest. The case, heard in Saint Louis, Missouri, is captioned Diana Landau, as Trustee for the Laura E.A. Forrester Hearell Revocable Trust v. Morgan Keegan & Company, Inc. (Case Number 08-01276).
According to the investor's attorney, Chicago securities attorney Stoltmann, "This arbitration award, and the granting of punitive damages, affirms our view that Morgan Keegan clearly took advantage of thousands of unsuspecting investors. These funds contained some of the riskiest, toxic derivatives possible and those risks were not made clear to investors. Morgan Keegan portrayed these funds as safe, conservative and appropriate for clients with an investment objective of capital preservation. The funds were anything but safe and secure."
The Morgan Keegan bond funds that are the subject of hundreds of investor arbitrations and lawsuits 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)
According to Andrew Stoltmann, "The full scope of the scheme engaged in by Morgan Keegan is becoming clear to FINRA arbitrators and the regulators actively investigating Morgan Keegan. Hundreds of millions of dollars in each fund were misclassified for years as preferred stocks and corporate bonds, when in fact they were high risk, below investment grade derivatives. The funds were pitched as 'widow and orphan' funds when in fact they were leveraged with highly risky derivatives in the 'toxic waste' tranches. Given the recent flood of documents and information we have discovered in the last four months, it is clear Morgan Keegan has nowhere to run. We expect significant arbitration awards against Morgan Keegan going forward. We hope the regulators take action soon against Morgan Keegan and use the findings by multiple arbitration panels as a roadmap to finally act against the firm."
For more information on the award, please contact Andrew Stoltmann