Consumer Fraud

RMK lawsuits may be consolidated in Tennessee

The Daily News, which covers Memphis, reported yesterday that class action cases against Regions Morgan Keegan (RMK) pending in U.S. District Court for the Western District of Tennessee may be consolidated under U.S. District Judge Hardy Mays. The paper reports Judge Mays issued a ruling Tuesday that answers some questions about the request, and which group or groups could be selected as lead plaintiff in that event.

The RMK litigation involves investment funds managed by a branch of Morgan Keegan & Co., which is based in Memphis. Regions Financial Corp., headquartered in Birmingham, owns Morgan Asset Management, an arm of Morgan Keegan.

According to suits filed on behalf of plaintiffs in these cases, seven RMK investment funds took a nose dive because of their ties to the subprime mortgage lending crisis, and stockholders found themselves holding greatly devalued portfolios. Because the funds had been initially represented as low-risk, when in actuality they were tied to the volatile subprime lending market, stockholders are bringing suit against Regions Morgan Keegan for their losses.

According to the Daily News story, Judge Mays considered five putative class actions that were filed in the local federal court, and two motions to consolidate. The paper reports the judge’s ruling states actions that were included in the motions for consolidation “share both factual and legal issues, arise from the same facts, raise similar legal claims and name substantially the same defendants.”

Judge Mays has not yet named a lead plaintiff in the consolidation. He ruled out one group that had petitioned for the spot as being too large, with 19 individual and institutional investors, according to the Daily Times.

There are many individual claims still pending across the country in this matter.