Morgan Keegan Fraud results in substantial fund losses for investors
Investors in certain Regions Morgan Keegan funds have experienced substantial losses as a result of poor management and fraud. Morgan Keegan made unreasonable investment decisions and failed to adequately inform investors about the true nature of the risk they were exposed to. Over $1 billion in losses have been suffered due to an overconcentration in untested and highly vulnerable securities tied to the subprime mortgage market.
>>INFORMATION: Morgan Keegan Fraud Lawsuits
Morgan Keegan Fraud
Morgan Keegan lawsuits are being reviewed for investors in:
- RMK Select High Income Fund A
- RMK Select High Income Fund C
- RMK Select High Income Fund I
- RMK Select Intermediate Bond Fund A
- RMK Select Intermediate Bond Fund C
- RMK Select Intermediate Bond Fund I
- RMK High Income Fund
- RMK Multi-Sector High Income Fund
- RMK Advantage Income Fund
- RMK Strategic Income Fund
The Morgan Keegan Select High Income Fund and Morgan Keegan Select Intermediate Bond Fund were hit particularly hard by the subprime mortgage crisis at the end of 2007. Fund managers invested heavily in new types of mortgage securities, which had not been tested through market cycles. They also failed to minimize the risk of investment losses by placing a substantial portion of the portfolios in these collateralized debt obligations.
Morgan Keegan fraudulently failed to disclose to investors the full extent of their investment in these risky loans backed by subprime mortgages. Material facts were misrepresented or not disclosed at all, and many investors only became aware of the problems as their investments suffered substantial losses towards the end of last year, when the subprime mortgage loans began to fall apart.
As a result of the Morgan Keegan fraud, certain bond funds experienced losses between 50% and 67% during 2007. The Regions Morgan Keegan Select High Income Fund and Select Intermediate Bond Fund were hit particularly hard, and no other mutual funds in the United States suffered the same extent of losses attributed to subprime mortgage exposure. According to Morningstar, the RMK Select High Income Fund was in the 99th percentile of all similar funds in the high-yield bond fund category.
Many sales representatives made unrealistic claims about the RMK fund’s investments, which misled investors and provided a false sense of security. Promotional materials indicated that the funds were less volatile than other high yield funds, which was not accurate. They also indicated that the investment goal was for “higher yields without excessive credit risk”, yet over 50% of the assets of the RMK High Income Fund and RMK Select Intermediate Fund were invested in mortgage backed securities.
MORGAN KEEGAN FRAUD LAWYERS
The Morgan Keegan fraud particularly hurt uneducated investors who relied on the investment advise of the brokerage firm. Those who were inappropriate for the funds, such as older investors or inexperienced investors who came into a lump sum of money, would have no reason to know the risk they were exposing their investments to.
The Morgan Keegan fraud lawyers at Saiontz, Kirk & Miles, P.A. are reviewing potential lawsuits on behalf of individuals who suffered financial losses in excess of $10,000.00 as a result of investment in certain Morgan Keegan funds. Have your investments reviewed to determine if financial compensation may be available by requesting a free investment Morgan Keegan fraud consultation.
