MutualFundWire.com: Legal Troubles Cause Regions' 2Q Loss to Widen

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Wednesday, July 28, 2010

Legal Troubles Cause Regions' 2Q Loss to Widen

Regions Financial Corp.'s second-quarter loss widened on a $200 million from regulatory proceedings involving its Morgan Keegan mutual-fund business, reports Matt Jarzemsky of Dow Jones Newswires.

The Birmingham, Alabama-based lender posted a loss of $277 million, compared with a year-earlier loss of $188 million. Federal officials have alleged that Morgan Keegan, a mutual fund subsidiary of Regions Financial, defrauded investors by deliberately inflating the value of risky subprime securities.

Below is the section on the regulatory proceedings included in Regions' earnings release:

Morgan Keegan regulatory proceedings

As previously disclosed, on April 7, 2010, the Securities and Exchange Commission, a joint state task force of securities regulators from Alabama, Kentucky, Mississippi and South Carolina and the Financial Industry Regulatory Authority announced that they were commencing administrative proceedings against Morgan Keegan, Morgan Asset Management and certain of their employees for violations of federal and state securities laws and NASD rules relating to certain funds previously administered by Morgan Keegan and Morgan Asset Management. Based on the current status of settlement negotiations, Regions believes that a loss on this matter is probable and reasonably estimable. Accordingly, at June 30, 2010, Morgan Keegan recorded a non-tax deductible $200 million charge representing the estimate of probable loss.