Another flagrant foul

Morgan Keegan & Co. Inc. has lost another arbitration case stemming from losses suffered by a former professional athlete when its bond funds blew up: This time it is liable to a former NBA all-star for $1.45 million in damages. This month, a Financial Industry Regulatory Authority Inc. arbitration panel awarded Horace Grant compensatory damages for a variety of violations, including breach of fiduciary duty and fraudulent misrepresentation. He asked for $1.5 million in compensatory damages, as well as punitive damages, which the panel didn't grant. Mr. Grant's attorney, Andrew Stoltmann of Stoltmann Law Offices PC, said that this was the largest award by far against Morgan Keegan. The firm, a broker-dealer subsidiary of Regions Financial Corp., faces 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. “The funds lost 90% of their value in about 16 months,” Mr. Stoltmann said. “This case shows arbitrators are taking very seriously claims involving investors who have sustained huge losses in toxic waste derivatives like [collateralized-debt obligations] and [collateralized-mortgage obligations].” Mr. Grant's career spanned from 1987 to 2004, and he played forward and center for the Chicago Bulls, the Orlando Magic, the Seattle Supersonics and the Los Angeles Lakers. He isn't the first former professional athlete to sue Morgan Keegan over losses from the bond funds. Jerome Woods, who played for the Kansas City Chiefs, won a $950,000 award against the firm in April, and national broadcaster and former baseball player Tim McCarver won a claim of $100,000 in February. In an e-mail, a Morgan Keegan spokeswoman wrote: “The panel did not provide any reasons for their finding in the Grant case and any explanation offered by the claimants attorney is just speculation.”