ATLANTA, Ga. (WVLT) -- Tennessee is among a group states that will share in a $200 million dollar settlement after reaching an agreement with Morgan Keegan & Co., Morgan Asset Management, and certain employees, the Kentucky Dept. of Financial Institutions announced on Wednesday.
The deal follows an investigation by regulators in Kentucky, Alabama, Mississippi, South Carolina, Tennessee, and several other states as well as the Securities and Exchange Commission and the Financial Industry Regulatory Authority.
The Kentucky DFI said the investigation centered on seven proprietary mutual funds Morgan Keegan broker dealers sold to more than 30,000 customers. The seven funds combined to lose about $1.5 billion from March 31, 2007 to March 31, 2008.
The state accused the firms and certain employees of misleading investors by not telling them the risks regarding mutual funds and giving them misleading information. Also, the companies are accused of not performing due diligence and of having supervisory failures.
“It is the firm’s obligation to ensure their sales force provides accurate disclosures and sufficient descriptions of the products being marketed and sold to investors. By entering into this consent order, state and federal regulators are putting firms on notice that these types of activities will not be tolerated,” said DFI Securities Division Director Shonita Bossier.
The settlement will be divided between the SEC Fair Fund and a States' Fund, both of which are set up to help investors, the DRI added. MCK and MAM will also have to pay to administer the funds and the distribution of the settlement money.
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