Ex-Morgan Keegan Fund Directors to Settle SEC Claims
Eight former Morgan Keegan & Co. mutual-fund directors agreed to settle U.S. regulatory claims that they allowed assets backed by subprime mortgages to be overvalued as the housing market collapsed in 2007.
The settlement outlined today in a Securities and Exchange Commission administrative order would resolve claims filed by the agency in December 2010. A hearing set for April 2 has been stayed, according to the order.
“The parties have agreed in principle to a settlement on all major terms,” the SEC said in the order signed by an agency official and attorneys for the eight former directors. Terms weren’t disclosed.
Morgan Keegan agreed to pay $200 million to settle related fraud allegations in 2011. The brokerage, formerly owned by Regions Financial Corp. (RF), was acquired by Raymond James Financial Inc. (RJF) last year.
The eight directors, who were responsible for determining the fair value of securities that lacked readily available quotations, delegated valuation to a committee without providing meaningful guidance, the SEC said in 2010. The directors made little effort to learn how the values were being determined, according to the regulator.
The directors named by the SEC were J. Kenneth Alderman, Jack R. Blair, Albert C. Johnson, James Stillman R. McFadden, Allen B. Morgan Jr., W. Randall Pittman, Mary S. Stone and Archie W. Willis III.
Stephen Crimmins of K&L Gates in Washington, attorney for Blair, Johnson, McFadden, Pittman, Stone and Willis, declined to comment. Peter Anderson of Sutherland Asbill & Brennan LLP in Atlanta, a lawyer for Alderman and Morgan, didn’t immediately respond to an e-mail seeking comment.