A recent report in the Memphis Business Journal says Consulting Services Group LLC (CSG) is the latest company to file suit against Morgan Keegan & Co., alleging illegal actions resulting in significant losses in its investments in several Morgan Keegan funds. CSG, based in Memphis, provides investment services for foundations, endowments, public funds, trust companies and high-net worth individuals.
According to the Business Journal report, CSG has filed suit in Shelby County Circuit Court, naming as defendants Morgan Keegan, Morgan Asset Management, Regions Financial Corp., and James Kelsoe Jr., who was at one time manger of the funds held by CSG. The paper says the company is alleging such illegal activities as misrepresentation and suppression, fraudulent concealment, breach of fiduciary duty, intentional interference with business relationships and “negligent supervision and conspiracy” involving the Regions Morgan Keegan funds.
Regions Morgan Keegan has been under fire for mismanagement and misrepresentation of several of its investment funds since 2008, when clients began crying “foul” after taking significant losses in funds sold to them as “low risk.” According to the many lawsuits filed on behalf of RMK investors, the funds were presented to them as low risk but were actually tied to the volatile mortgage market. When the housing industry collapsed, the funds were significantly devalued, almost overnight.
Funds included in the CSG lawsuit include the Regions Morgan Keegan Select High Income Fund, the Regions Morgan Keegan Select Intermediate Bond Fund, RMK High Income Fund Inc., RMK Strategic Income Fund Inc., RMK Advantage Income Fund Inc. and the RMK Multi-Sector Fund Inc.
Arbitration of pending lawsuits against Regions Morgan Keegan is being handled by the Financial Industry Regulatory Authority (FINRA). According to the Business Journal, arbitration panels have heard 78 cases to date.