| Company: | Morgan Keegan & Co., Inc., Morgan Keegan Asset Management, Inc. |
| Ticker Symbol: | RMK |
| Class Period: | Dec-6-04 to Feb-6-08 |
| Date Filed: | Oct-6-08 |
| Lead Plaintiff Deadline: | Dec-5-08 |
| Court: | Western District of Tennessee |
| Allegations: | |
The plaintiffs are persons who purchased or otherwise acquired the shares of certain closed-end mutual funds offered by Regions Morgan Keegan Trust, including shares of the RMK Multi-Sector High Income Fund, Inc. (the "RHY Fund"), the RMK Advantage Income Fund (the "RMA Fund"), the RMK Strategic Income Fund (the "RSF Fund") and the RMK High Income Fund (the "RMH Fund") (collectively referred to as the "Funds"), pursuant and/or traceable to the Funds' false and misleading Registration Statements and Prospectuses during the period December 6, 2004 through February 6, 2008 and purchasers of any of the Funds during the period from December 8, 2006 through December 5, 2007.
The complaints charge the Funds' registrants, the Funds' administrator, Morgan Keegan & Company, Inc. ("Morgan Keegan"), the Funds' adviser, Morgan Keegan Asset Management, Inc., Regions Financial Corp. and certain of Morgan Keegan's officers and/or directors with violations of the Securities Act of 1933 and the Securities Exchange Act of 1934. The complaints allege that defendants issued materially false and misleading statements regarding the Funds' portfolios and financial results. As a result of defendants' false statements, the Funds' shares traded at artificially inflated prices.
According to the complaints, portions of the Funds' portfolios were invested in collateralized debt obligations ("CDOs"), including CDOs backed by subprime mortgages to high-risk borrowers. For years, shares of the Funds traded within narrow ranges. Then in early March 2007, as the subprime crisis began to emerge, the Funds began to trend lower as the market learned of their exposure to the subprime market. Nonetheless, shares of the Funds continued to trade at artificially inflated prices as the full extent of the Funds' exposure had not yet been revealed. As late as the summer of 2007, as the housing and credit crisis deepened, the Funds continued to play down and conceal the Funds' growing exposure to the problems in the subprime market. Beginning in early July 2007, the Funds began to acknowledge serious problems in their portfolios related to the Funds' exposure to the subprime market. On November 7, 2007, Portfolio Manager James C. Kelsoe wrote a letter to investors in which he acknowledged further problems the portfolios faced due to the deterioration in the housing sector and the subprime mortgage crisis. The shares continued to collapse subsequent to these announcements as the impact of the risky holdings in the Funds' portfolios became more apparent to the market.
As a result of these disclosures, the price of the Funds' shares collapsed. For example, RMH Fund shares closed at $4.20 per share on February 6, 2007, a decline of 70% from early July 2007. According to the complaints, the true facts which were omitted from the Registration.
Statements/Prospectuses or were known by the defendants but concealed from the investing public during the Class Period were as follows: (a) the Funds lacked adequate controls and hedges to minimize the risk of loss from mortgage delinquencies which affected a large part of their portfolios; (b) the extent of the Funds' liquidity risk due to the illiquid nature of a large portion of the Funds' portfolios was omitted; (c) the extent of the Funds' risk exposure to mortgage-backed assets was misstated; and (d) the extent to which the Funds' portfolios were subject to fair value procedures was misstated.
If you acquired the securities of the defendants during the Class Period you may, no later than the Lead Plaintiff Deadline shown above, request that the Court appoint you as lead plaintiff through counsel of your choice. You may also choose to remain an absent class member. A lead plaintiff must meet certain requirements.
