Monday, August 25, 2008

FINRA Arbitration Claims Focused on Morgan Keegan Bond Mutual Funds

They're unlikely to set any legal precedent or bleed into any other local competitors, but the lawsuits and arbitration cases piling up at Morgan Keegan & Co., Inc., are likely to make their way into college finance textbooks as examples of poor investment structures.

At least that's the opinion of Morningstar senior fund analyst Lawrence Jones.

"From an investment manager case study, this will become one of the cases taught in business school about how illiquid, thinly traded securities can sink a fund in short order and there's nothing that can be done about it," Lawrence says.

What's at issue are the types of investments held in several mutual funds once managed by Morgan Asset Management, the investment advisory for Morgan Keegan & Co., the risk of those investments and whether or not investors were properly informed of the risk.

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