Jackson, MS—As part of a joint task force which included the States of Alabama, Kentucky, South Carolina, Tennessee, the Securities Exchange Commission (SEC), and the Financial Industry Regulatory Authority (FINRA), the Mississippi Secretary of State’s Office has reached a settlement agreement with Morgan Keegan and Morgan Asset Management which will return approximately $200-Million dollars to investors.
“This investigation was initiated by the Securities and Charities Division of the Mississippi Secretary of State’s Office. We intend to hold companies and individuals accountable for not disclosing risks associated with their investments and presenting misleading marketing materials to investors,” says Secretary of State Delbert Hosemann. “This settlement will hopefully bring partial relief to Mississippians who have experienced financial hardship due to the actions of these two companies.”
As part of the settlement, Morgan Keegan and Morgan Asset Management have agreed to pay $200-Million dollars to investors. In addition, these companies will pay the fees and expenses incurred by the State of Mississippi in the course of the investigation and subsequent legal proceedings.
This settlement does not affect any other claims an investor may have against these companies or individuals. This Order represents a settlement by the State of Mississippi to provide partial restitution to Mississippi investors. Investors may still pursue legal recourse against Morgan Keegan, Morgan Asset Management, and the individuals involved in the action.
The Secretary of State’s office found no evidence or indication of any involvement by Mississippi offices, brokers, agents, or employees of Morgan Keegan in this Order.
“Our Agency continues to work on behalf of Mississippi investors to reach a settlement for losses incurred by investors. Mississippians need to feel secure when they invest their hard earned dollars they are given accurate information,” says Secretary Hosemann. “We hope this action sends a strong message that these types of actions will not be tolerated in Mississippi or any state.”
The joint task force also settled its actions against James Kelsoe. Kelsoe has agreed to pay $50,000 to the State of Mississippi in restitution and has agreed to the revocation of his existing licenses, registrations, and an Order of Permanent Bar from involvement in the securities industry.
Actions against Gary Stringer, Brian Sullivan and Michelle Wood are still pending. As part of the settlement agreement, Morgan Keegan and Morgan Asset Management must cooperate fully with these proceedings. A hearing date has been set for August 5, 2011. Cliff Hodge will act as Administrative Hearing Officer in these cases.
In addition to the monetary fine, other settlement terms include:
· Morgan Keegan and Morgan Asset Management are prohibited from creating, offering, or selling any proprietary funds for two (2) years;
· The State of Mississippi may conduct additional audits or exams of Morgan Keegan and Morgan Asset Management offices and/or branches. For the next two years, the expense of those audits will be paid by the two companies.
· If Morgan Keegan and Morgan Asset Management form or sell any proprietary investment products before January 1, 2016, the firms will need to retain an independent auditor, at their expense, for three years. This auditor must be approved by the joint task force.
· For the next three years, the two companies must provide mandatory training to investment advisors and registered agents, which is comprehensive of the goods and services they sell or recommend to clients.
The Secretary of State’s Office entered into a joint administrative action with Alabama, Kentucky, South Carolina, Tennessee, the SEC, and FINRA against Morgan Keegan, Morgan Asset Management Company, and their employees James Kelsoe, Brian Sullivan, Gary Stringer, and Michelle Wood on April 7, 2010. The action centered on seven mutual funds sold by Morgan Keegan to approximately 2000 Mississippi consumers.
Investors with questions regarding the Order may email the Securities and Charities Division of the Secretary of State’s Office at [email protected].