Morgan Keegan Bond Funds Misconduct

Many investors are told that bonds are less risky than stocks, and that they can reduce their financial risk by investing in mutual funds that own a variety of such bond funds.

Although this is the theory, the reality can be much more harmful to unsuspecting investors.  For example, six separate bond funds operated by Morgan Keegan plummeted in value in less than a year.  The Morgan Keegan Select Intermediate Bond Fund (Ticker Symbol MKIBX) lost 48.9% of its value per share between December 31, 2006 and November, 30. 2007.  Regions Select High Income Fund (Ticker Symbol RHIIX) lost 61.4% of its value per share over the same period.

In addition, four other Morgan Keegan closed-end bond funds experienced huge losses over a period of less than a year.  The four are:

1. RMK Multi Sector High Income Fund (Ticket Symbol RHY),
2. RMK Strategic Income Fund (Ticket Symbol RSF),
3. RMK Advantage Income Fund (Ticket Symbol RMA); and
4. RMK High Income Fund (Ticket Symbol RMH)

Although these investments were sold as relatively safe investments, Morgan Keegan often failed to disclose that it was investing in high-risk investments relating to mortgages or that some of the investments could not be easily sold if they declined in value.  Some of these bond funds also weren’t diversified; too many of their investments were tied to a single industry. 

On December 29, 2008, the names of some of these funds were changed.  For example, the RMK High Income Fund, Inc. was changed to the Helios High Income Fund, Inc., and ticker symbol was changed from RMH to HIH.  Likewise, the Morgan Keegan Select High Income Fund was changed to the Helios Select High Income Fund.  In Greek mythology, Helios was the sun god.  Perhaps the folks at Morgan Keegan believe that a simple name change will blind investors to the ugly history of their bond funds. 

Over the course of the last 18 months, hundreds of lawsuits have been filed against Morgan Keegan and its parent company, Regions Financial, in connection with these bond funds.  For many investors your best strategy is to pursue individual claims against Morgan Keegan.

If you invested in any of these six Morgan Keegan bond funds, you may be able to recover your losses.