MEMPHIS, Tenn. (May 6, 2010) — Morgan Keegan & Company’s voluntary repurchase program for illiquid auction rate securities (ARS) has reduced overall client exposure in ARS by 93% over the past 15 months.
Initiated in February 2009, the repurchase program has enabled Morgan Keegan to proactively purchase from investors all auction rate securities which the firm underwrote and sold to eligible retail investors, as well as most of the bonds for which the firm served strictly as a distributor. Through this voluntary effort to restore liquidity, investors have received full principal plus interest due on illiquid ARS, reducing overall client exposure to less than $165 million from a peak of $2.2 billion.
“Our relationships with our clients are of utmost importance to Morgan Keegan, and we have made significant progress in our effort to reduce our retail clients’ exposure to ARS and restore liquidity,” said Kevin Giddis, president of Morgan Keegan’s Fixed Income Capital Markets division. “All told, the program has been very successful and these investors have recovered their full investments plus interest. The collapse of the ARS market was not something that anyone anticipated, but we felt it was important to our clients to take this action.”
Morgan Keegan’s program was inclusive of all ARS held by eligible clients in Morgan Keegan accounts with one significant exception – the failed auction rate securities issued by the Jefferson County, Alabama sewer system. In a recent FINRA arbitration case, an investor sought to recover losses from an investment in the failed Jefferson County securities. The panel awarded the claimant $1.125 million, the face value of the ARS, to be paid by Morgan Keegan, which acted solely as a selling agent for these securities.
“While we agree whole-heartedly that investors should recover their illiquid investments in the auction rate securities issued by Jefferson County, Alabama, we strongly believe that the burden of recovery appropriately lies with the underwriters of these failed securities, namely JP Morgan, not Morgan Keegan,” said Giddis. “The recent criminal convictions of Jefferson County public officials and as yet unresolved SEC charges against investment bankers with JP Morgan involved in the creation of these securities provide strong factual support for our position.”
About Morgan Keegan
Morgan Keegan & Company, Inc., one of the largest full-service brokerage and investment banking firms in the nation, is the securities brokerage, trust and asset management arm of Regions Financial Corp. (NYSE: RF). Headquartered in Memphis, Tenn., Morgan Keegan has over 300 offices in 19 states. Additional information about Morgan Keegan can be found at www.morgankeegan.com.
Contact:
Kathy Ridley
901-529-5449
Kathy.ridley@morgankeegan.com
Eric Bran
901-524-4114
Eric.bran@morgankeegan.com
