Morgan Keegan Set Back $210 Million From Arkansas Investigation

After 3 years, an investigation that started with a single complaint in Arkansas resulted in 13-state task force investigation that led to a $200 million settlement and $10 million penalty from investment firm, Morgan Keegan.

On Wednesday, Arkansas Securities Commissioner (ASC) Heath Abshure entered a consent order involving Morgan Asset Management, Inc. and Morgan Keegan & Co., Inc. The order found that Morgan Keegan and its employees repeatedly violated provisions of the Arkansas Securities Act by engaging "in dishonest and unethical practices" in the securities business. The ASC order shows that Morgan Keegan engaged in a "repeated pattern of providing inaccurate and misleading information" surrounding 7 investment funds to Arkansas investors.

A copy of the order can be read here.

The case, which started in 2008, grew from an investigation by the Arkansas Securities Commission to include the U.S. Securities and Exchange Commission as well as 12 other states.

As part of the settlement agreement, Morgan Keegan agreed to pay $200 million into a settlement fund for investors and a civil penalty of $10 million. Arkansas will receive $434,215 of the civil penalty. In addition, Morgan Keegan is prohibited from "creating, offering or selling any proprietary funds for a two-year period," according to the settlement.

"With this order, the Department intends to hold Morgan Keegan accountable for not adequately disclosing risks associated with the proprietary funds it marketed in Arkansas," said Abshure. "This settlement should bring partial relief for Arkansas investor losses. We also hope the settlement sends a strong message to other members of this industry that violations of the Act will not be tolerated and will be punished."

Details for processing claims for the settlement fund are being finalized.