Bond Fund Fraud Claims

Representing Investors Nationwide

In the age of online investment banking and brokering and with the rise in the number of Americans investing in securities, it is no surprise that with the increase in investors also comes an increase in the number of securities fraud violations. Sadly, though, many cases of securities fraud go unreported because investors are simply too embarrassed to admit they have been duped by their broker or brokerage firm. Or, investors feel that they have just been another victim of a poorly performing stock market.

Whatever the case, it is crucial that investors who have lost money due to a broker’s omissions or misrepresentations know that you are not alone and losing your money is not you fault. There is legal help available if you have been the victim of securities fraud in Florida, or anywhere in the United States. The experienced stockbroker fraud attorneys at Colling Gilbert Wright & Carter, have the experience and knowledge necessary to fight to get you the monetary compensation you deserve.

Morgan Keegan Fund Fraud and Brookstreet Securities Corp

Morgan Keegan & Company is a regional investment banking, securities brokerage, trust and asset management firm that was founded in 1969 in Memphis, Tennessee. Currently, Morgan Keegan has over 450 offices in 19 states with over 4,000 employees and over $650 million in equity capital. At this time, Morgan Keegan is at the center of a very large mutual funds fraud investigation; Morgan Keegan bond fund fraud that has cost investors billions of dollars (and counting).

In the wake of the sub-prime mortgage market collapse, legal action is being taken against Morgan Keegan. Our bond fraud attorneys represent people just like you: hard-working consumers who thought they were investing their money in safe investments only to find out that the bond funds they invested in relied heavily on collateralized mortgage obligations (“CMOs”) that were backed by sub-prime loans.  CMO’s are securities of repackaged loans that are divided and sold to investors.

Morgan Keegan is not the only company embroiled in the debacle involving losses in securities backed by sub-prime loans. After losing money to large-scale investments in mortgage-backed securities, groups of investors are suing the now defunct Brookstreet Securities Corp of Irvine, California. Brookstreet operated through independent contractor brokers nationwide, and, in 2006, the company generated approximately $70 million in gross revenue.

To date, there are over 40 arbitration cases filed against Brookstreet. Like the claims involving the Morgan Keegan bond funds, the Brookstreet claims allege brokers assured investors that the CMO’s were stable investments that would yield consistent returns. Instead, the CMO’s generated only losses.

Misrepresentations and Omissions

To date, the Morgan Keegan Select Intermediate Bond Fun and the Morgan Keegan Select High Income Fund are down 47% and 56%, respectively. The funds and stockbrokers selling these funds committed fraud by misrepresenting or “omitting” material facts relating to:

  • The nature of the risk being assumed by an investment in the Funds
  • The illiquidity of certain securities in which the Funds invested
  • The extent to which the Funds’ portfolios contained securities that were illiquid or bore the characteristics of illiquid securities making them vulnerable to quickly becoming unsaleable at the prices at which they were being carried on the Funds’ records
  • The extent to which the Funds’ portfolios were subject to fair value procedures
  • The extent to which the values of such securities were based on estimates of value and the uncertainty of such values
  • The concentration of investments in a single industry

 

The huge losses in share value were caused by the Funds’ heavy investment in fairly new types of manufactured or fixed income securities that had not been tested through market cycles. The losses have also been attributed to the failure of the Funds to have previously complied with required and disclosed procedures relating to the manner in which the funds’ assets were invested.

If you or someone you love has lost money due to no fault of your own, please contact our bond fund fraud attorneys at Florida securities fraud attorneys office today. We will evaluate your claim and fight to get your money back.