Yesterday a judge upheld the decision made last fall that holds Morgan Keegan responsible for a $1.4 million loss by investor Horace Grant. The retired Chicago Bulls basketball star sued Regions Morgan Keegan for losses resulting from his investments in mutual funds recommended by the financial management company. Morgan Keegan appealed the decision, saying arbitrators had already made up their minds against the investment company when they heard the case.
In his 27-page opinion, U.S. District Judge S. James Otero disagreed with Morgan Keegan, and sided with the Financial Industry Regulatory Authority (FINRA), which is acting as arbitrator in these cases. According to a report in the Memphis Daily News, the judge said Morgan Keegan – which is based in Memphis – did not have sufficient grounds to challenge the award, which was presented in September 2009 and reported on this blog.
Grant’s case is one of many filed against Regions Morgan Keegan. The lawsuits allege Morgan Keegan brokers misrepresented a number of its funds as low-risk, when the funds were actually tied to the volatile subprime mortgage market. When the real estate market crashed, the funds lost up to 80 percent of their value, almost overnight.
Court documents reveal that during a discussion of the case during a break, arbitrators said, among other things, “This fund – these funds were a sucker play,” according to the news report.