Settlement reached in Morgan Keegan case - - Jackson, MS

Settlement reached in Morgan Keegan case

JACKSON, MS (Mississippi News Now) -

A massive settlement is now reached in a legal battle which pitted the state of Mississippi against the investment agency Morgan Keegan.

The company has now agreed to pay $200 million to settle civil fraud charges that it overstated the value of mortgage investments just as the housing market was collapsing and lured buyers of its funds with false sales materials. 

Secretary of State Delbert Hosemann announced the settlement Wednesday afternoon at the state capitol.

Five states and federal regulators took action against Morgan Keegan & Company and Morgan Asset Management claiming they caused investors to loose more than $2 billion through fraudulent and reckless business practices.

Hosemann say the company misled more than 2,000 Mississippi investors, resulting in a loss of about $71 million in mutual funds.

With the settlement, Hosemann says Mississippi's portion will be put into two funds and will be headed up by an administrator yet to be named, beginning the process of returning the money to those investors.

"You will see us to continue to be active when people deviate from what the standard is. This was a deviation here. This should not have occurred," Hosemann said. "And the fact that we have a $200 million settlement, the largest ever by the state of Mississippi, is indicative of how important we though it was that investors be protected."

Morgan Keegan has a dozen branch offices across Mississippi.

In addition to the settlement, two employees agreed to pay penalties for their alleged misconduct.

The company will also be paying millions of dollars in fines to the state as well as more than a million dollars in investigative costs.

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