"These bond funds were held out by Regions Morgan Keegan financial advisors as a higher-income alternative to the money market," says Christopher J. Gray, from the Law Office of Christopher J. Gray, P.C. "Each of the funds was a little bit different. The unifying characteristic is that there was no disclosure of the funds' exposure to extremely high losses when dislocation in the US financial sector occurred in 2008–09. With the events of 2008 and 2009 in the US financial sector, the funds lost value very rapidly in a manner that a reasonable investor wouldn't have expected, based on what he was told about the funds."
Regions Morgan Keegan funds reportedly lost somewhere between 50 and 65 percent of their value, depending on the fund in question. Investors who lost money when the funds lost their value are turning to arbitration to recover their lost money.
"These funds are subject to a FINRA [Financial Industry Regulatory Authority] arbitration agreement," Gray says. "Anyone who lost money in these funds can file an arbitration. If people are interested in pursuing a claim, they should do so sooner rather than later. Filing later may not mean they can't bring a case at all, but one of the legal theories they would base their claim on could expire."
As with claims against other financial firms, Regions Morgan Keegan faces allegations that its funds were marketed as safe and the risks associated with those funds were not disclosed to investors.
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See a full list of affected RMK funds here.
It is believed that hundreds of arbitrations have been filed against Regions Morgan Keegan regarding the funds, and claimants have enjoyed increasing success in these cases in recent months.
"Initially, the panels found in favor of Regions Morgan Keegan in some cases," Gray says. "But the claimants' lawyers kept going after Regions Morgan Keegan for documents and can now put together a more complete case. The tide is turning in favor of the claimants now that those documents have been dredged up."