According to Reuters, a Financial Industry Regulatory Authority (:FINRA) arbitration panel in Boca Raton, Florida, rescinded investors’ claim against Morgan Keegan & Co., a unit of Raymond James Financial Inc. (RJF). The arbitration claim made by the group of investors, accused Morgan Keegan of misrepresenting documents related to a series of troubled bond funds.
These troubled funds issued by Morgan Keegan, lost as much as 80% of their value in 2008. Therefore, the unit agreed to pay $200 million as regulatory fine for settlement of enforcement actions by regulators related to the funds.
Later on, in 2010, Morgan Keegan was sued by a group of investors, including two trusts and a family limited partnership related to these funds. The complaint lodged claims that Morgan Keegan distorted documents and sold inappropriate funds. They implicated this brokerage firm of issuing misleading statements and making omissions related to these funds as well as concealing the risks associated with it. Investors’ demands included $1.9 million in damages for losses and other penalties.
Alongside, Morgan Keegan was accused by federal and state regulators for escalating the value of mortgage-backed securities in the funds fraudulently, at the time of the housing market bubble in 2007.
Moreover, this brokerage firm was swamped by over 1,000 cases associated with the funds. Yet, some of these cases are still pending in the FINRA arbitration process.
Though Morgan Keegan was acquired by Raymond James in 2012, but previous owner- Regions Financial Corporation (RF), remains responsible for paying claims, if any, as the funds disaster took place before the acquisition.
However, spokespersons of all related parties refrained from issuing any comments.
Financial regulators are proactively trying to recover losses through lawsuits against banks that were involved in malpractices related to the selling of troubled securities and bonds. The continuously increasing number of lawsuits tends to dent the institutions’ reputation and financials. However, the investors, who were duped through such investments, should come up with strong evidence to recoup such losses and receive their claims.
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