{"id":5316,"date":"2012-05-08T00:00:00","date_gmt":"2012-05-08T05:00:00","guid":{"rendered":"https:\/\/institutionalinvestorsecuritiesblog.blawgcloud.com\/2012\/05\/the_11th_circuit_revives_sec_f"},"modified":"2022-07-22T08:47:37","modified_gmt":"2022-07-22T13:47:37","slug":"the-11th-circuit-revives-sec-f","status":"publish","type":"post","link":"https:\/\/www.investorlawyers.com\/blog\/the-11th-circuit-revives-sec-f\/","title":{"rendered":"The 11th Circuit Revives SEC Fraud Lawsuit Against Morgan Keegan Over Auction-Rate Securities"},"content":{"rendered":"

The 11th U.S. Circuit Court of Appeals has revived the US Securities and Exchange Commission\u2019s fraud lawsuit against Morgan Keegan & Co. accusing the financial firm of allegedly misleading investors about auction-rate securities. The federal appeals court said that a district judge was in error when he found that alleged misrepresentations made by the financial firm\u2019s brokers were immaterial. The case will now go back to district court. Morgan Keegan is a Raymond James Financial Inc. (RJF)<\/a> unit.<\/p>\n

The SEC had sued Morgan Keegan in 2009. In its complaint, the Commission accused the financial firm of leaving investors with $2.2M of illiquid ARS. The agency said that Morgan Keegan failed to tell clients about the risks involved and that it instead promoted the securities as having \u201czero risk\u201d or being \u201cfully liquid\u201d or \u201cjust like a money market.\u201d The SEC demanded that Morgan Keegan buy back the debt sold to these clients.<\/p>\n

In 2011, U.S. District Judge William Duffey ruled on the securities fraud lawsuit and found that Morgan Keegan did adequately disclose the risks involved. He said that even if some brokers did make misrepresentations, the SEC had failed to present any evidence demonstrating that the financial firm had put into place a policy encouraging its brokers-dealers to mislead investors about ARS liquidity. Duffey pointed to Morgan Keegan\u2019s Web site, which disclosed the ARS risks. He said this demonstrated that there was no institutional intent to fool investors. He also noted that a \u201cfailure to predict the market\u201d did not constitute securities fraud and that the Commission would need to show examples of alleged broker misconduct before Morgan Keegan could be held liable.<\/p>\n

Continue Reading \u203a<\/a><\/div>\n","protected":false},"excerpt":{"rendered":"

The 11th U.S. Circuit Court of Appeals has revived the US Securities and Exchange Commission\u2019s fraud lawsuit against Morgan Keegan & Co. accusing the financial firm of allegedly misleading investors about auction-rate securities. The federal appeals court said that a district judge was in error when he found that alleged misrepresentations made by the financial […]<\/p>\n","protected":false},"author":2,"featured_media":0,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"jetpack_post_was_ever_published":false,"footnotes":""},"categories":[3865,3949,3752,4005,3858,3758,3761],"tags":[],"class_list":["post-5316","post","type-post","status-publish","format-standard","hentry","category-auction-rate-securities","category-breach-of-fiduciary-duty","category-financial-firms","category-misrepresentations-and-omissio","category-morgan-keegan","category-raymond-james","category-securities-and-exchange-commis"],"yoast_head":"\nThe 11th Circuit Revives SEC Fraud Lawsuit Against Morgan Keegan Over Auction-Rate Securities — Investor Lawyers Blog — May 8, 2012<\/title>\n<meta name=\"description\" content=\"The 11th U.S. Circuit Court of Appeals has revived the US 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