Morgan Keegan’s parent company, Regions Financial Corp., said Wednesday that, after resolving some disputes with regulators and agreeing to pay $210 million, it was exploring all options with respect to the future of the Memphis-based broker-dealer. The possible sale of Morgan Keegan would affect roughly 1,200 financial advisors working in about 300 offices in 20 states with some $82 billion in assets under management.
“Morgan Keegan has been a subsidiary of Regions since 2001 and is a leading brokerage and investment banking firm based in the Southeast and a very valuable franchise,” said Regions President and CEO Grayson Hall, in a press release. “However, the resolution of this legacy regulatory matter gives Regions greater flexibility with respect to the Morgan Keegan franchise and the ability to explore opportunities that are consistent with our strategic and capital planning initiatives.”
Early Wednesday, the SEC, state regulators and the Financial Industry Regulatory Authority announced that Morgan Keegan and Morgan Asset Management agreed to pay $210 million to settle fraud charges related to subprime mortgage-backed securities. According to the SEC, two Morgan Keegan employees also agreed to pay penalties for their alleged misconduct, including one who is now barred from the securities industry.
“The falsification of fund values misrepresented critical information exactly when investors needed it most – when the subprime mortgage meltdown was impacting the funds,” said Robert Khuzami, director of the SEC’s division of enforcement, in a press release. “Such misconduct does grievous harm to investors.”
The Morgan Keegan settlement was related to the sale of certain mutual funds and closed-end funds (RMK Funds), a business that Morgan Asset Management divested in 2008.