Profit sharing plan recovery for losses on RMK Bond Funds (FINRA, 2010)
Brian Smiley and Mike Bishop, along with co-counsel, represented the pension plan for a medical practice. The plan’s losses arose from investments solicited in three Regions Morgan Keegan Bond Funds (RMK High Income, RMK Strategic Income, and RMK Multi-Sector Funds). These funds took incredible risks with shareholders’ money by owning low level tranches of mortgage and asset-backed securities and collateralized debt obligations. Morgan Keegan defended the case aggressively and even sought recovery of its attorneys’ fees. The arbitration panel ruled in favor of the claimant, specifically finding Morgan Keegan liable for fraud, breach of fiduciary duty, and violation of the Tennessee Consumer Protection Act. It awarded compensatory damages of $301,195, interest of $14,060, attorneys’ fees (including for discovery abuse) of $115,689, plus costs of $52,413.