4 states, SEC take action against Morgan Keegan for alleged fraud costing investors $2 billion

4 states, SEC allege Morgan Keegan cost investors

JACKSON, Miss. — Federal regulators and four states want brokerage firm Morgan Keegan & Co. to repay investors for alleged fraudulent and reckless business practices they say cost customers more than $2 billion.

Four states, the U.S. Securities and Exchange Commission and the Financial Industry Regulatory Authority announced administrative actions Wednesday against the Memphis, Tenn.-based company.

The SEC and regulators in Mississippi, Alabama, Kentucky and South Carolina allege that Morgan Keegan fraudulently overstated the value of funds backed by subprime mortgages. FINRA alleges it used false and misleading sales materials.

Along with fines, Morgan Keegan could lose the ability to sell securities.

Morgan Keegan said it is disappointed in the action and will vigorously refute the claims.