By Bobby Harrison/NEMS Daily Journal
JACKSON – About 2,000 Mississippians who lost money through Morgan Keegan mutual funds will be eligible to receive a portion of a $200 million settlement the Memphis-based company negotiated with federal and state regulators.
Mississippi Secretary of State Delbert Hosemann announced Wednesday the agreement negotiated with six states, including Mississippi.
About 39,500 customers nationwide lost more than $1 billion in Morgan Keegan mutual funds falsely advertised as “conservative” investments. Mississippi clients lost more than $71 million.
Hosemann said Mississippi’s share of the $200 million settlement will be about 6 percent. He estimated about 40 percent of Mississippi clients – those making the smallest investments – will recoup all their losses, but all should be at least partially reimbursed.
The settlement negotiated by regulators in Mississippi, Alabama, South Carolina, Kentucky and Tennessee will not affect individual claims against Morgan Keegan.
Morgan Keegan also agreed to pay $1.3 million to Mississippi for fees and legal expenses related to the settlement, which involved civil and not criminal allegations.
“This settlement will hopefully bring partial relief to Mississippians who have experienced financial hardship” due to the actions of Morgan Keegan and Morgan Asset Management, Hosemann said. The companies are subsidiaries of Regions Financial Corp.
Hosemann said he hopes the settlement “sends a strong message that these types of actions will not be tolerated.”
The actions that led to the settlement occurred primarily in 2007, Hosemann said. The funds were marketed as “conservative,” or safe, investments when they were not. The funds were backed in part by subprime mortgages.
Hosemann said a complaint to his office by a Mississippi customer of Morgan Keegan led to the investigation.
Hosemann also announced Wednesday that Morgan Keegan employee James Kelsoe of Memphis has to pay $50,000 in restitution to Mississippi and has agreed to a permanent ban from the securities industry.
Action is pending against other Morgan Keegan employees. But Hosemann said no Mississippi Morgan Keegan employee was involved in actions leading to the settlement.