MONTGOMERY, Ala. — Attorneys representing Morgan Keegan, Morgan Asset Management, James C. Kelsoe, Jr., Brian B. Sullivan, Gary S. Stringer and Michele F. Wood as respondents have requested an administrative hearing with the Office of the Mississippi Secretary of State. State law requires a hearing officer be appointed by the Secretary of State to preside over the administrative hearing. Cliff Hodge of Jackson will serve as Mississippi hearing officer in this case.
The Joint Administrative hearing includes Mississippi, Alabama, South Carolina and Kentucky and will be held at the offices of the Alabama Securities Commission in Montgomery, Ala., and is scheduled for Oct. 5.
This request is a result of the Securities and Charities Division of the Secretary of State’s Office, the Alabama Securities Commission, the Kentucky Department of Financial Institution, the South Carolina Attorney General, the Securities and Exchange Commission (SEC) and the Federal Industry Regulatory Authority (FINRA) filing various administrative actions against the respondents. The administrative action was the culmination of a multi-state investigation involving six mutual funds sold by Morgan Keegan broker dealers to approximately 13,000 customers. Those six mutual funds lost approximately $2 billion in value from March 31, 2007, to March 31, 2008. This includes approximately $30 million invested by Mississippians.
The administrative action alleges Morgan Keegan and Morgan Asset Management made material omissions and misrepresentations in marketing materials, made material omissions and misrepresentations in regulatory filings, withheld information from and misrepresented information concerning the funds to the Morgan Keegan sales force, provided preferential treatment to certain customers, failed to make suitable recommendations concerning purchase and concentration of the funds in customer accounts, failed to adequately supervise their employees and obstructed the due diligence process.
The administrative action also requests the respondents show cause why their registration should not be revoked. Furthermore, the states intend to seek administrative penalties and restitution for investors.
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