[ by Howard Haykin ]

The 2010 arbitration case was filed by a group of investors who claimed Morgan Keegan & Co. defrauded them in their purchase of money-losing bond funds.  They sought $7.6 million in damages.  But the panel rejected the claimants' arguments and their request of a $7.6 million award, was

Potential Fly In The Ointment.  The panel's vote was not unanimous, with one of the 3 arbitrators in the case, signed a dissent, which provides the claimants with a shred of hope - it's some leverage, should they ask a court to throw out the ruling - an unusual move that is rarely successful, say lawyers.

In their 2010 Statement of Claim, the investors charged Morgan Keegan, now a unit of Raymond James Financial Inc, with civil fraud, misrepresentation and the sale of unsuitable investments, among other things.  They sought more than $7.6 million for losses stemming from bond funds that Morgan Keegan sold, according to the ruling, dated Monday.

The funds in question, dropped as much as 80% in 2008, and were the subject of a $200 million regulatory fine issued by FINRA against Morgan Keegan in 2011. The firm was accused by federal and state regulators of inflating the value of mortgage-backed securities in the funds just as the housing market was collapsing in 2007.

All told, Morgan Keegan has been inundated by more than 1,000 cases related to the funds. Some of those cases are still winding through the FINRA arbitration process.  The arbitration hearings were held in Las Vegas. No reasons were given by any of the arbitrators for their decisions. 

For further details, go to:  [Reuters, 9/13/12].