Missouri takes New Approach to Morgan Keegan Alleged Securities Fraud in Mamtek Bonds

Missouri Secretary of State Jason Kander issued a press release Thursday regarding failed artificial sweetener manufacturer Mamtek.  In the release, available here, Kander announced a cease-and-desist order against Morgan Keegan & Co. Inc., the underwriter for bonds issued for a Mamtek project to build a sucralose manufacturing facility in Moberly, Missouri.

This recent approach by Kander to recoup funds for investors alleges that Morgan Keegan did not complete adequate due diligence on the project prior to underwriting the bond issue.  “"If Morgan Keegan had done its due diligence and investigated the feasibility of Mamtek's business plan we would not be here today," Kander said at a news conference in St. Louis. "This is unacceptable."

The city of Moberly issued over $30 million in bonds to fund construction of the plant.  The project was derailed when the first principal payment on the bond was missed.  Now the incomplete factory serves as a reminder of the 600 jobs that never materialized, and a loss for investors all of the U.S. 

The failed project made headlines last year when Mamtek CEO Bruce Cole was charged with securities fraud by the Securities and Exchange Commission (“SEC”).  The SEC complaint against Cole may be viewed by clicking here.  These charges are in addition to the criminal charges Cole faces in Missouri related to Mamtek’s failed project.

It remains to be seen if Kander will be able to recoup anything, as investors who lost millions continue to seek ways to recoup from Morgan Keegan’s alleged lack of due diligence in this bond issue.

Please contact Block & Landsman if you invested in Mamtek bonds so we may discuss potential legal options with you.

Defrauded Investors Given Hope of Recovery As Morgan Keegan Parent Settles Regulatory Charges for $210 Million

Nearly 40,000 investors who lost $1.5 billion in fraudulent subprime mortgage-backed mutual funds were given a small boost in their claims for recovery as the parent company of investment banking firm Morgan Keegan & Co., Regions Financial Corp., agreed to pay $210 million to settle regulatory charges targeting its subprime mortgage mutual funds.

The Securities and Exchange Commission (SEC), the Financial Industry Regulatory Authority (FINRA) and several state securities agencies brought charges against Morgan Keegan relating to its management of five fixed-income mutual funds that were loaded with subprime mortgages. The agencies accused the firm of manipulating the price of the funds as the underlying mortgages dropped in value, and then misrepresenting the true values of the securities. According to the director of the SEC's Division of Enforcement, "the falsification of fund values misrepresented critical information exactly when invsetors needed it most -- when the subprime mortgage meltdown was impacting the funds."

The investors who purchased these mutual funds will receive $200 million of the Morgan Keegan settlement. Investors who lost money in these investments, however, still have claims for more than $1 billion in losses, and continue to have the right to seek their own damages in individual arbitration claims they can file with FINRA. By consulting with an experienced investment fraud lawyer, investors can determine whether they have a claim for damages as a result of their investments with Morgan Keegan.

The law firm of Block & Landsman represents investors in arbitration and in lawsuits for fraud and breach of fiduciary duty arising out of investment losses. Contact one of the attorneys at Block & Landsman for a free consultation.