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Class Action ERISA Lawsuit Seeking Lead Plaintiff

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Memphis, TNThe deadline to become the lead plaintiff of an ERISA plan class action lawsuit is fast approaching, according to the 6/3/10 issue of Globe Newswire. The class action lawsuit against Morgan Keegan & Co. and various other defendants was filed on May 19 before Judge Samuel H. Mays Jr. of the US District Court for the Western District of Tennessee, Memphis Division.

Investors, who may have been financially harmed by the alleged actions of those managing the four closed-end mutual funds that lay at the heart of the litigation, have until July 2 to file motions for appointment as Lead Plaintiff in the matter. The class action was filed on behalf of all investors who may have either purchased or acquired through other means shares in the four funds between June 6, 2005 and July 14, 2009.

The funds at issue are identified as RMK Advantage Income Fund ("RMA"), RMK Strategic Income Fund ("RSF"), RMK High Income Fund ("RMH")
and RHY Multi-Sector High Income Fund ("RHY").

The ERISA investment class action centers on the allegation that the various defendants invested the Funds in poor-quality asset-backed securities that were heavily leveraged through complex capital structures, all the while assuring investors that securities held in the funds were corporate bonds and preferred stocks. The defendants in the ERISA lawsuit are accused of concealing the true health and structure of the Funds.

When the Funds suffered serious losses, it is alleged that the defendants chalked up the losses to the prevailing mortgage meltdown that was holding the country in an economic death grip. According to the lawsuit, the Funds actually failed due to their concentrated holdings of low-priority tranches of asset-backed securities.

It is also alleged that those entrusted with managing and promoting the Funds and representing the Funds to investors frequently compared the performance of the Funds to that of gilded funds such as the Lehman Brothers BaUS High-Yield Index, which contained only corporate bonds.

Investigations on the part of five state regulators, as well as FINRA and the Security and Exchange Commission (SEC), resulted in the charges.

It was on July 9 of last year that the SEC served Regions Financial Corp, the parent company of Morgan Keegan, with a Wells Notice, effectively alerting Regions that the SEC intended to trigger an enforcement action.

ERISA is a federal statute that requires those managing investment products—especially those with a 401(k) component—to act with prudence in the management of the portfolio. These investment products, funds and portfolios must be managed in the best interest of the investors.

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