Corporate & Securities Law

SNSFE attorneys are investigating Morgan Keegan & Company following SEC charges that the firm committed fraud in the marketing and sale of auction rate securities to customers.  The SEC indeed has filed a complaint in the U.S. District Court for the Northern District of Georgia against Morgan Keegan & Company, a Tennessee-based broker-dealer, for misleading investors regarding the liquidity risks associated with auction rate securities, known as ARS, that the firm underwrote, marketed, or sold.

The SEC's complaint alleges that Morgan Keegan misrepresented to customers that ARS were safe, highly liquid investments that were comparable to money-market funds.  According to the complaint, in 2007 and early 2008, Morgan Keegan was aware that the ARS market was deteriorating.  Specifically, the complaint alleges that investor concerns about the creditworthiness of ARS insurers, auction failures in certain segments of the ARS market, increased clearing rates for auctions managed by Morgan Keegan and other broker-dealers, and higher than normal ARS inventories at Morgan Keegan collectively indicated that the risk of auction failures had materially increased.  The SEC alleges that Morgan Keegan sold approximately $925 million of ARS to its customers between November 1, 2007, and March 20, 2008, but failed to inform its customers about liquidity risks for ARS, even after the firm decided to stop supporting the ARS market in February 2008.

While the SEC's complaint seeks certain relief, SNSFE attorneys are investigating in order to bring claims to redress the wrongs that Morgan Keegan has committed upon investors.  Those with information or those with claims about ARS should feel free to contact attorneys at SNSFE.

Source:  SEC Litigation Release No. 21143