Morgan Keegan scores an arbitration win over bond fund blowups

After a string of high-profile securities arbitration losses, Morgan Keegan & Co. Inc. emerged as a winner in an $8.2 million investor complaint that alleged unsuitability and breach of fiduciary duty related to firm's bond funds.
FEB 25, 2010
After a string of high-profile securities arbitration losses, Morgan Keegan & Co. Inc. emerged as a winner in an $8.2 million investor complaint that alleged unsuitability and breach of fiduciary duty related to firm's bond funds. Morgan Keegan, a broker-dealer subsidiary of Regions Financial Corp., is faced with hundreds of arbitration claims from investors who bought the company's bond funds and have seen as much as 95% of the funds' value evaporate since mid-2007. This year, Morgan Keegan lost cases of $1.45 million to Horace Grant, a former NBA all-star, and $950,000 to ex-NFL Pro Bowler Jerome Woods. The investors whose claims were just denied were led by William Strong, who filed the claim against Morgan Keegan in January 2008. The Strong Company Inc., another claimant listed on the lawsuit, produces construction and maintenance products. Mr. Strong did not return a call seeking comment. A three-member panel of the Financial Industry Regulatory Authority Inc. last month also ordered the claimants to pay Morgan Keegan $157,000 in attorney's fees and $20,000 in fees for expert witnesses. As is typical in most arbitration decisions, the panel gave no explanation for their decision, saying simply that the claims “were denied in their entirety.” Those awards are significant, said Michael Brady, an attorney in the matter for Morgan Keegan. “The attorney fee award against these claimants is an obvious indication that the arbitrators believed the claims were unwarranted and that Morgan Keegan deserved to be reimbursed for at least some of the costs incurred in defending the case,” he said.

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