The December 27 issue of Fund Action noted that participation by a funds board in an investor lawsuit is a first. That decision, according to reports, will allow attorneys for lead plaintiff Austen Landers to access confidential advisor documents currently in the fund boards' possession.
Investors in the RMK high income fund—one of the funds that failed to the ultimate surprise and dismay of investors—have been reeling from the loss, as will any investor attempting to sock away funds for retirement or to leave a nest egg for surviving family members. Allegations are that the defendants in the derivative lawsuit failed to disclose the risks associated with the funds.
The circumstances related to the collapse of the identified Regions Morgan Keegan funds will likely be revealed in the pages of internal documents made available by the funds board as a result of their participation in the Regions Morgan Keegan lawsuit. Various board materials and reports now available to plaintiff lawyers will likely shed revealing information on valuations and liquidity.
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It was reported that PricewaterhouseCoopers also provided an audit with regard to the three failed RMK funds targeted in the lawsuit.
The fund board's participation in the lawsuit is predicated upon a Memorandum of Understanding (MOU) between the board and counsel for the plaintiff. Approval of the MOU by the district court in Tennessee is required. A spokesperson for defendant Morgan Keegan noted that the MOU between the funds board and the plaintiff was accepted in principal by the Court without an accompanying intervention by the defendant.
As of December 27, Morgan Keegan had not filed its formal opposition to an MOU that appears to be a pivotal cog in the plaintiff's case in the Regions Morgan Keegan lawsuit.