Bond Fund Arbitration Results in $267,000 for Morgan Keegan Investor

An investor who filed an arbitration claim as a result of losses suffered in a Morgan Keegan bond fund that collapsed after the subprime mortgage meltdown, was recently awarded $267,711 by the Financial Industry Regulatory Authority (FINRA).

Starting in late 2007, a number of bond funds managed by Morgan Keegan began a steep decline in value as a result of heavy investments that were tied to the subprime mortgage market. Some of the Morgan Keegan funds have dropped by more than 70%.

The bond fund arbitration claim was filed on behalf of a San Francisco investor, alleging that Morgan Keegan mislead investors by indicating that it was a relatively conservative investment and failing to disclose the extent of their investment in mortgage-backed securities.

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The Financial Industry Regulatory Authority, which oversees about 5,000 brokerage firms throughout the United States, ordered Morgan Keegan to repay all of the investors losses, plus interest and court costs, according to the Memphis Business Journal.

Hundreds of other similar Morgan Keegan arbitration lawsuits are currently pending against the brokerage firm that is a division of Regions Financial Corp. The cases involve several different Morgan Keegan bond funds, including the RMK Strategic Income Fund, RMK Select High Income Fund and RMK Advantage Fund.

In two other recent Morgan Keegan arbitration losses, investors were awarded$187,215 and $109,881 in compensatory damages by FINRA panels.

Morgan Keegan has acknowledged that they have already lost at least 9 cases filed by investors who lost money in their bond funds. Cumulative awards to date are believed to be about $1 million, and it has been estimated that the Morgan Keegan bond fund awards may eventually cross the $200 million mark.


  • AshokapathyApril 10, 2009 at 6:47 am

    May be this will make investors not to blindly accept the words of the funds and similarly make the funds more resposible and accountable. This once again proofs the power of arbitration.

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