News
Mississippi files action against Morgan Keegan after $2-Billion in losses
April 26, 2010
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Jackson--Secretary of State Delbert Hosemann, along with representatives from the Securities and Exchange Commission (SEC), the Federal Industry Regulatory Authority (FINRA), and Joseph Borg, Director of the Alabama Securities Commission, announced an administrative action has been filed against Morgan Keegan & Company, Morgan Asset Management, and their employees James C. Kelsoe, Brian B. Sullivan, Gary Stringer, and Michele Wood. This action is a direct result of an intensive multi-state investigation, led by the Securities and Charities Division of the Mississippi Secretary of State's Office and the Alabama Securities Commission, and includes the states of South Carolina and Kentucky.
"If the allegations in the Joint Notice are found to be accurate by the hearing officers, we and other states involved in the investigation intend to hold these companies and individuals responsible," says Secretary Hosemann.
At the center of the investigation were six mutual funds sold by Morgan Keegan broker dealers to approximately 13,000 customers. Those six mutual funds lost approximately $2 billion dollars from March 31, 2007 to March 31, 2008. This includes approximately $30,000,000 invested by Mississippians.
The administrative action alleges Morgan Keegan and Morgan Asset Management:
- Made material omissions and misrepresentations in marketing materials,
- Made material omissions and misrepresentations in regulatory filings,
- Withheld information from and misrepresented information concerning the funds to the Morgan Keegan sales force,
- Provided preferential treatment to certain customers,
- Failed to make suitable recommendations concerning purchase and concentration of the funds in customer accounts,
- Failed to adequately supervise their employees, and
- Obstructed the due diligence process.
The administrative action also requests Respondents show cause why their registration should not be revoked. Furthermore, the States intend to seek administrative penalties and restitution for investors. These companies and individuals have the right to request an administrative hearing.
Other states involved in this multi-state investigation include: Texas, Louisiana, Georgia, Florida, North Carolina, Tennessee, Arkansas, Illinois, and Missouri.
