Morgan Keegan is the investment banking and securities division of Regions Financial Corp, the largest banking system in middle Tennessee.  The brokerage firm has offices in Alabama, Arkansas, Florida, Georgia, Kentucky, Mississippi, North Carolina, South Carolina, Tennessee and Virginia.

Investors have filed class action lawsuits as well as individual arbitrations against Regions Morgan Keegan.  According to the lawsuit, Morgan Keegan funds suffered heavy losses in value because they were invested in new types of fixed income securities. The lawsuit also alleges that Fund managers violated the trust of investors by placing a substantial portion of their portfolios in relatively new forms of securities, which hadn’t been tested through market cycles.  As a result of these failures, investors in Morgan Keegan mutual funds were exposed to substantially more risk than investors in other high and intermediate income funds, which didn’t suffer the same drastic losses from market conditions.

Why did these funds perform so poorly? The funds were over concentrated in mortgage-backed securities and collateralized debt obligation (CDO), which made up over 50% of each fund’s portfolio.  In simple terms, CDOs are bonds established on large pools of debt.  These investments pay interest like ordinary bonds. Unlike ordinary bonds, however, mortgage backed securities also repay the principal a little bit at a time as the underlying mortgage is paid off. The risk is that the mortgage will never get paid off.

Fleming & Associates, L.L.P. reminds investors of the benefits of filing an individual arbitration claim, as opposed to participating in a class action lawsuit.  By participating in a class action lawsuit, an investor will most likely recover only pennies on the dollar.  If you have lost $10,000 or more on Morgan Keegan bond funds, it may be more beneficial for you to file an individual securities arbitration claim. Investors who file a securities arbitration claim may obtain an overall higher rate of recovery as opposed to participating in a class action lawsuit. If you lost $10,000 or more in the Morgan Keegan Bond Funds, contact the Fleming & Associates, L.L.P Morgan Keegan Law suit attorney to receive your free case evaluation and consultation.