Morgan Keegan RMK Funds Lead to Large Victory for Sonn & Erez

Regions Morgan Keegan funds (RMK) are proprietary funds which can be purchased as open end RMK Funds (RMK Select intermediate Bond Fund and RMK Select High Income Fund) or closed end RMK funds (RMK High Income Fund, RMK Strategic Income Fund, RMK Advantage Income Fund and RMK Multi-Sector High Income Fund). This funds appeared as superior fixed income funds that offered higher yields than their peer funds with lower risk. The final hearing in Fornell v. Morgan Keegan case no. 10-02526 was held December 19-23, 2011, during which Mr. Fornell, the trustee of a pension plan, brought the claim against Morgan Keegan for out-of-pocket losses of $105,000 in the RMK Funds.

These funds operated by investing in CMOs, CMBs, and CDOs, as well as other structured investment products. Sadly, they proved to be extremely detrimental to investors as a result of the holdings being exterminated around the end of 2007. By early 2010, the Securities and Exchange Commission (SEC), Financial Industry Regulatory Authority (FINRA), the Alabama Securities Commission, the Kentucky Department of Financial Institutions, the Mississippi Secretary of State’s Office and the South Carolina Office of the Attorney General had all filed charges against Morgan Keegan and several of its employees for fraudulent activity in connection with all of the RMK funds.

Mr. Fornell made a claim under the Employee Retirement Income Security Act (ERISA) statute as well as made common law claims such as breach of fiduciary duty. ERISA was established in 1974, and according to the government, its purpose is to “sets minimum standards for most voluntarily established pension and health plans in private industry to provide protection for individuals in these plans.”

Notably, the panel in this case made a finding that the broker, Andy Hall, was a co-fiduciary of the pension plan and found that there was a violation of ERISA as well as the common law claims. The panel awarded well managed damages in the amount of $195,000 as well as cost in the amount of $20,000 (all amounts are rounded off). Furthermore, the panel also found that Mr. Fornell was entitled to attorney’s fees under ERISA, which the firm is currently seeking in Federal Court.

Sonn & Erez “is very pleased that the panel applied the law to the evidence and found for Mr. Fornell”. Sonn & Erez has gone to trial or final hearing 9 times and has succeeded in obtaining recoveries in 8 of 9 cases (two settled before the end of the final hearing). We are very proud of our success at trial and in the dozens of cases that we settled for investors in the RMK funds. We continue to ardently represent investors who were misled in regards to the RMK Funds. If you sustained losses in the RMK Funds, please contact our firm for a free consultation.

FHAward.pdf

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