ATLANTA (CN) – Morgan Keegan & Co. misled customers to sell them $925 million in illiquid auction rate securities, the SEC claims in Federal Court. The SEC asks the court to order Morgan, a wholly owned subsidiary of Regions Financial Corp., to buy back the ARS from thousands of its customers.
The SEC claims Morgan Keegan sold nearly $1 billion from Nov. 1, 2007 to March 20, 2008, without informing customers about the increasing risks. The ARS market froze in February 2008 when major brokers and banks stopped supporting it.
“Morgan Keegan was clearly aware that the ARS market was deteriorating, but it went so far as to actually accelerate its ARS sales even after other firms’ ARS auctions began to fail,” SEC enforcement division director Robert Khuzami said in a statement.