Payments set in 5 states in Morgan Keegan deal

By The Associated Press

JACKSON, Miss. (AP) — A.B. Data Ltd. will distribute money from settlements with Morgan Keegan & Co. and Morgan Asset Management to investors in Mississippi, Alabama, Kentucky, South Carolina and Tennessee.

Mississippi Secretary of State Delbert Hosemann said Monday the five states and the federal Securities and Exchange Commission hired the Milwaukee, Wis.-based company to divide up the $200 million to Morgan Keegan investors.

The settlements resulted from an investigation of seven bond funds sold by Morgan Keegan to more than 30,000 investors. The firms were charged with sales violations and overvaluing the funds that lost approximately $1.5 billion in value between March 31, 2007, and March 31, 2008.

The Securities and Exchange Commission and the five states required Morgan Keegan and Morgan Asset Management to pay a total of $200 million to establish an SEC Fair Fund and a States’ Fund, both to be paid to investors. A.B. Data has previously administered several settlement funds in securities litigation cases and for the SEC.

Hosemann said about 2,000 Mississippians allegedly were misled about six Morgan Keegan bond funds, losing $65 million.

Hosemann said nothing in the settlement requires investors to give up any rights in arbitration or any other proceeding that investors are legally entitled to initiate.

Investors who purchased any Morgan Keegan funds from other broker-dealers are also allowed to file claims for their losses.

Hosemann said his office is seeking civil penalties against three Morgan Keegan and Co. officials, Brian B. Sullivan, Gary Stringer and Michelle Wood, none of whom resides in Mississippi. Hosemann contends that the three kept customers and financial advisers in the dark.

The defendants’ attorney, Peter J. Anderson of Atlanta, maintains his clients were wrongly singled out. He said Mississippi is seeking a $25,000 fine per violation, and if every sale is counted, the fines could be considerable.

The proceedings before Jackson lawyer Cliff Hodge, appointed by the secretary of state as the hearing officer, have concluded, said Pamela Weaver, spokeswoman for the secretary of state’s office.

“We are awaiting a final decision from the hearing officer,” Weaver said.

Morgan Keegan’s parent company is Regions Financial Corp., based in Birmingham, Ala.