Regions Financial Corp has agreed to $125 million of settlements to resolve lawsuits involving allegations of securities fraud and breach of fiduciary duty as to three Morgan Keegan bond mutual funds that collapsed in 2007 after investing heavily in subprime mortgages and other risky debt. The preliminary settlements call for $110 million of cash to be paid to investors in Morgan Keegan's Short Term Bond, Select Intermediate Bond and Select High Income funds, and $15 million of cash to go directly to the funds, less any legal fees.
The Court has preliminarily approved the settlements of the Class and Derivative Actions (collectively referred to as the “Settlement”) negotiated by Lead Counsel. To view copies of the Settlement Agreements and Preliminary Approval Orders, please click here on the case below:
• Class Action Case Preliminary Approval Order
• Derivative Case Preliminary Approval Order
• Stipulation and Agreement of Derivative Action Settlement
Pursuant to the Preliminary Approval Orders, on or around February 29, 2016 a Notice and Proof of Claim Form will be mailed to those Settlement Class Members identified by Morgan Keegan. Persons identified by the Open-End Funds as shareholders of the Funds on May 29, 2009 will be entitled to a separate distribution.
If you do not receive a Notice and Proof of Claim Form by March 15, 2016, and you believe you may be a Settlement Class Member, you should contact the Claims Administrator. www.rmkopenendfundsettlement.com
In 2007, a series of Regions Morgan Keegan open-end funds collapsed after plummeting as much as 80% in value. The funds (Regions Morgan Keegan’s Select High Income Fund, Select Intermediate Bond Fund, and Select Short Term Bond Fund), were forced to shut down and liquidate their assets, while investors lost over $1 billion.
These severe losses were not simply the result of the “mortgage meltdown.” Rather, contrary to representations made to investors, the Funds were heavily invested in the riskiest, low-priority tranches of structured finance deal, backed by risky assets. RMK never disclosed to investors that they were exposing them to the riskiest asset-backed securities, causing investors’ massive losses.
Investors brought a series of lawsuits against the defendants, including Regions Financial, Regions Bank, Morgan Keegan & Company, Inc., Morgan Asset Management, and PricewaterhouseCoopers, Inc., alleging violations of federal securities laws, breach of fiduciary duty and other state law causes of action.
The case is In re: Regions Morgan Keegan Securities, Derivative and ERISA Litigation, U.S. District Court, Western District of Tennessee, No. 09-md-02009.