Morgan Keegan: Losses, Claims and Lawsuits

Boca Raton, FLIf you are an investor with Morgan Keegan and had money in certain Morgan Keegan Investment Funds you are no doubt upset (to say the least) about the loss of your hard-earned money. If it's any consolation, you are not alone. Many people lost money in the Morgan Keegan stock crisis and are fighting back by filing FINRA arbitration claims and lawsuits against the company.

In fact, in the past few weeks, several new Financial Industry Regulatory Authority (FINRA) arbitration claims have been filed against Morgan Keegan. The claimants all allege that they lost money in the Regions Morgan Keegan Multi-Sector High Income Fund, the Regions Morgan Keegan High Income Fund, the Regions Morgan Keegan Strategic Income Fund and/or the Regions Morgan Keegan Advantage Income Fund.

Furthermore, they allege that Morgan Keegan made "false and misleading statements about the Funds' risk tolerance and asset allocation, as well as the lack of diversification." Finally, they claim that Morgan Keegan violated Rule 10b-5 of the Securities Exchange Act of 1934 and applicable state securities acts in its sale of securities to clients.

According to Tim Grant in the Pittsburgh Post-Gazette, even safe investments can have some risks, but those are often not made obvious to the investor. For example, some bond funds have high-risk investments in them, but investors are not warned about those high-risk investments, so they believe their bond funds are safe.

Although people who have lost a significant amount of money can file a class action lawsuit, it is often preferable to file a FINRA arbitration claim. This is because the recovery in a class action lawsuit can be relatively small compared with a FINRA award. Furthermore, FINRA claims do not generally take as long as class action lawsuits to be resolved. Finally, each individual investor will have very different circumstances, making it difficult to file one lawsuit that covers each situation. In an arbitration hearing, each claimant has the opportunity to present his or her unique circumstances to the FINRA panel.

However, numerous class action lawsuits have been filed against Morgan Keegan. These lawsuits will likely represent people who did not file arbitration claims against Morgan Keegan. A judge has now consolidated those claims into two separate class action lawsuits: one will represent investors in open-end funds while the other represents investors in closed-end funds.

In announcing his order to consolidate, the judge noted that the cases share "both factual and legal issues, arise from the same facts, raise similar legal claims and name substantially the same defendants."

The lawsuits allege that various Morgan Keegan Funds dropped dramatically in value because of their ties to subprime mortgages. Shareholders say they were told that the funds were low-risk but they were actually very susceptible to a loss in value because of the subprime lending market.

If this sounds like something you went through, you have the options of joining a class action lawsuit or filing an arbitration claim to regain your lost money. A lawyer can help determine your best course of action.