Since December 2007, seven separate lawsuits have been filed in Tennessee against Regions Financial Corp., its subsidiaries, and various company directors, all of which involve claims of negligence, misrepresentation and securities fraud. The terrible performance of several mutual funds managed by Regions’ subsidiary Morgan Keegan & Co. Inc. has caused investors to collectively lose millions of dollars and see their nest eggs and savings dry up. Now, Regions’ own employees have filed a class-action lawsuit against Regions.
Filed in Memphis, Tennessee, the class-action names Terry Hamby, a former Regions employee, as a plaintiff and other plaintiffs will be determined as the suit unfolds. According to the complaint filed, potential plaintiffs include participants and beneficiaries of the company plan between November 4, 2006 and “the date that Regions discloses the full impact of its financial problems.”
The defendants named in the suit include Morgan Asset Management Inc., Regions Bank, Regions Financial Corp. and various members of Regions' board of directors. Part of the reason for filing the suit in Memphis is because Morgan Asset Management is based in Memphis and is a fiduciary of the bank’s pension plan.
The same mutual fund holdings that hurt individual investors also affected thousands of Regions’ employee pension plans. The suit claims pension plans were inappropriately loaded with company stock at a time when Regions’ share price was sliding because of a variety of housing-related problems. The company also has spent millions to stop the hemorrhage in its RMK funds.
Meanwhile, Regions reported in a recent regulatory filing with the SEC that they could not yet determine the potential effects of the various RMK-related lawsuits in West Tennessee. That gave more reason for Regions’ employees to file suit; if Regions was unable to assess risks in its funds, then their employees could hardly be expected to evaluate the propriety of Regions stock in their portfolios.
Law firms nationwide are taking up similar investigations into a related pension situation at Morgan Keegan. One attorney said a figure as high as $10 million has been mentioned as the amount of employee money invested in the RMK funds that lost more than half their value in 2007.
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