Kyle Rote, Jr., took his employer, Morgan Keegan, to FINRA arbitration over a disputed $954,000 investment loss in 2 funds run by the firm.  While Mr. Rote and wife Mary Lynne won the case, the arbitration award from the panel was less than half the damages they had requested - they will receive only $400,000.  The couple also will have to pay for their legal and arbitration costs out of the proceeds. Kyle Rote, Jr. The son of former NY Giants running back Kyle Rote, Sr., Junior became a soccer star in his own right - was the 1st American to lead the league in scoring - and founded Athletic Resource Management, a major sports agency that had represented Scottie Pippen and now represents Tim Tebow and Michael Oher, the Baltimore Ravens defensive player of “The Blind Side” fame.  Rote then left that business and worked for Morgan Keegan.  Through his contacts at the firm, Rote invested in two of Morgan Keegan's investment funds run by one-time star manager James Kelsoe, Jr.  - both of which funds collapsed from over-exposure to subprime mortgage-backed securities. Morgan Keegan. Former parent Regions Financial Corporation sold the firm in January 2012 to Raymond James Financial.  For Morgan Keegan, the case with Kyle Rote is the latest blow to the firm that has had to defend itself against a flood of lawsuits and arbitrations stemming from the collapse of its 2 investment funds, mentioned above. Last year, Morgan Keegan agreed to pay $200 million to settle SEC charges that the firm had been overvaluing mortgage-backed bonds purchased by the 2 funds, and falsely marketed these funds to investors as conservative.  As part of the settlement, fund manager James Kelsoe agreed to a lifetime ban from the industry.  In a 2007 interview with Bloomberg News, Kelsoe said he had suffered from an “intoxication” with once-highflying subprime investments. Arbitration Statement of Claim. According to his Statement of Claim, Mr. Rote regularly ran into Mr. Kelsoe, a fellow Morgan Keegan employee, at the firm’s headquarters in Memphis.  Based on raves about the performance of the two funds, the RMK Select Intermediate Bond Fund and the Select High Income Fund, Rote invested nearly $1.2 million in the vehicles in 2005 and 2006.  The funds’ documents repeatedly noted that their aim was to preserve capital and that they held a “conservative credit posture.”  But by mid-2007, more than half of the funds were invested in subprime-mortgage-backed securities, and almost a year later, both funds had to be marked down by more than 90%.  It was claimants' contention that the investments violated their own respective risk and diversification rules, which limited investing in mortgage loans to a quarter of the funds’ assets. However, central to Mr. Rote’s case was the theme that even Morgan Keegan employees were left in the dark about the true nature of the funds’ investments. Respondent's Defense. Lawyers for Morgan Keegan, in turn, argued that Mr. Rote’s investments in the two funds were only a portion of his total investment in the firm’s offerings, and that over all, he had earned more than $800,000 from his investments since 1998. Impact of the Award. While expressing his clients' disappointment with the relatively small award, lawyer Peter Mougey noted his belief that the award would open the door to further action by other Morgan Keegan fund investors - and many of Mougey's other clients who have outstanding claims in excess of $100 million against Morgan Keegan. A spokesperson for Morgan Keegan said in an e-mail that the firm disagreed with the panel's ruling, and would most likely appeal - he also pointed to 3 arbitration cases against the firm decided recently in which claimants won no money. For further details on the arbitration award and the story, respectively, go to:  [FINRA Arb Award Notice to Kyle Rote Jr] and  [Dealbook, 2/22/12].