Morgan Keegan is 'On the Clock'.

[ by Howard Haykin ]

FINRA has given Morgan Keegan & Co. a 21-day window to resolve its arbitration obligation to a former customer of the firm, ex-NBA star Horace Grant - or else it may suspend the broker-dealer's license.  The warning came after FINRA received a request from Mr. Grant's lawyer to suspend Morgan Keegan if it refused to fulfill its arbitration obligation to his client. 

Once again, the dispute arose from a $1.46 million award issued in 2009 by a FINRA arbitration panel to the Claimant, Mr. Grant - representing Grant's losses on investments in a group of bond funds that the broker-dealer had recommended.  Those bond funds have created a sunami of lawsuits against the firm, which has since led the firm to sell itself to Raymond James.

While Morgan Keegan (eventually) (recently) paid Mr. Grant $1.59 million, Grant's lawyer said the brokerage still owes his client $333,000 more in interest.  Morgan Keegan, however, steadfastly refuses to pay that interest, saying it's overstated.  [For details, go to Tuesday's C-I What Went Wrong post, [Morgan Keegan-Horace Grant Arbitration Ruling Under Dispute.]

Morgan Keegan Responds.   The firm issued this statement:  "Morgan Keegan has paid in full the award rendered in the Grant arbitration proceeding,"  It added that its brokerage license is not in jeopardy.  It further noted that the notice it received from FINRA is a standard response to a request on Friday from Grant's lawyer that FINRA suspend Morgan Keegan's license for non-payment of an arbitration award.

Morgan Keegan has, since 2009, been trying to overturn the Grant arbitration ruling in court. A final attempt in Octorber, before a federal appeals court in California, fell short, as the court refused to overturn the award.

Options for Morgan Keegan.   Within the next 21 days, the firm must respond to FINRA's notice.  It may resolve the matter or turn off FINRA's clock, with any of the following options - as advised in FINRA's letter of instruction to Keegan's Chief Compliance Officer:

• request a hearing.
• pay the award, in the amount requested by Claimant Grant.
• settle with Grant.

Morgan Keegan also intends to ask a court to determine if more interest is owed.  That would effectively block further action by FINRA until the issue is resolved, the company said.

For further details, go to:   [ Reuters, 11/21/12 ].