Regions Financial May Face Federal Charges over Sale of Auction Rate Securities

Representing Investors Nationwide

According to a May 11, 2009 Reuters report, Regions Financial Corp., parent company of Morgan Keegan, may face charges for Morgan Keegan’s role in the improper sale of auction rate securities (ARS).

Morgan Keegan is already facing hundreds of FINRA arbitration claims over the marketing and sale of its Regions Morgan Keegan Bond and Income Funds.

An excerpt from the Reuters article appears below:

Mon May 11, 2009 12:34pm EDT

NEW YORK, May 11 (Reuters) – The U.S. Securities and Exchange Commission may launch a civil proceeding against the Morgan Keegan & Co brokerage unit of Regions Financial Corp over the alleged improper sale of auction-rate securities, Regions said on Monday.

In its quarterly report filed with the SEC, Regions said the regulator filed a “Wells Notice” in March against Morgan Keegan. Such a notice indicates that civil action is possible, and gives the recipient a chance to mount a defense.

Regions said the SEC is investigating the adequacy of Morgan Keegan’s disclosures of liquidity risks associated with auction-rate debt, and whether it sold a large volume of the debt after its ability to support the auctions was diminished. It said Morgan Keegan has cooperated with the SEC, and is buying back auction-rate debt it sold to retail customers.

Rates on auction-rate debt reset in periodic auctions. Regulators say brokerages misled investors into believing the debt was safe and the equivalent of cash. After the $330 billion market seized up in February 2008, many investors could not sell the debt or could sell it only at a loss.
Our firm is currently investigating and filing arbitration claims on behalf of investors seeking damages related to the Morgan Keegan bond funds and auction rate securities.

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