According to an August 22, 2008, Memphis Business Journal article Morningstar senior fund analyst, Lawrence Jones, has cited the Morgan Keegan & Co. RMK Select and RMK Closed-End Funds as an “investment manager case study” on how illiquid, thinly traded securities can blow up a mutual fund.
This revelation is not news to purchasers of the RMK Select High Income Fund (MKHIX), the RMK Select Intermediate Bond Fund (MKIBX), RMK Select Short Term Bond Fund (MSBIX), RMK Select High Income, Inc. (RHY), RMK Strategic Income, Inc. (RSF), RMK Advantage Income, Inc.(RMA), and RMK Mult-Sector Income Inc. (RHY). These investors, many of whom are retirees, thought they were purchasing conservative, income producing funds. Instead, they have suffered catastrophic losses that can never be recovered.
At the center of the controversy is the allegation Morgan Keegan and its representatives aggressively marketed and sold these funds as conservative investments with minimal share price fluctuation. However, as a result of the thinly traded, illiquid and esoteric nature of the underlying holdings, the funds have lost approximately 80% of their value over the past year.
There are numerous class actions lawsuits and arbitration claims alleging the nature of the investments and the risk associated with them was not disclosed to investors. If you believe you were sold any of the above referenced RMK Morgan Keegan Select open-end funds or Regions Morgan Keegan closed-end funds without adequate risk disclosure, please contact our office for a free case evaluation.