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Rating:Judge's Reversal Costs Regions $9.2MM Not Rated 0.0 Email Routing List Email & Route  Print Print
Wednesday, October 24, 2012

Judge's Reversal Costs Regions $9.2MM

News summary by MFWire's editors

Morgan Keegan is still getting hit with investor judgements stemming from the 2008 financial crisis.

Yesterday a federal court of appeals reinstated a $9.2 million judgement against Morgan Keegan over bond funds that lost value during the financial crisis, Reuters reported. The appeals court decided that a lower court was mistaken when it threw out the judgement last year over what it called "fraudulent" expert-witness testimony.

The ruling relates to testimony given by Craig McCann of Virginia-based Securities Litigation and Consulting Group. Reuters correspondent Suzanne Barlyn writes has "McCann's testimony, for years, has helped seal huge wins for investors," including judgements against Citigroup and former Lehman execs.

The appeals court ruled that McCann's staff had made a calculation error in preparing its testimony, and that there was no evidence of fraud.

Morgan Keegan has been hit with over 1,000 arbitration cases relating to a group of bond funds that lost 80 percent of their value during the financial crisis. Morgan Keegan agreed to pay a $200 million SEC fine over the funds, but has been "aggressively" fighting investors' claims in court, according to Reuters.

Barlyn writes that the ruling could "undermine Morgan Keegan's position in other securities arbitration rulings it is trying to overturn." And she quotes a Beverly Hills-based securities arbitration lawyer who hopes the judgement scares Morgan Keegan straight:

"This sends a clear message to Morgan Keegan to stop engaging in bad behavior in appealing investor wins. It's a direct message to start playing by the rules," he said.

The bond fund judgements are the legal responsibility of Morgan Keegan's former parent company Regions Financial Corp

Edited by: Chris Cumming


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