The newly-formed FINRA was asked to adjudicate two arbitration complaints against brokerage firm Morgan Keegan and fund manager James C. Kelsoe for two high net worth clients. The actions were filed by the Stoltmann Law Offices.

The arbitration statements of claim allege fraud, misrepresentations and omissions related to the failure of the firm and Kelsoe to fully disclose risks associated with the Morgan Keegan mutual fund investments in subprime related sectors, according to Andrew Stoltmann, of Stoltmann Law Offices, in Chicago .

Believed to be the largest individual claims filed to date against Morgan Keegan and the first filed against Kelsoe personally, the claims seek recovery of losses of $285,000 for one client and losses of $1.8 million for another, along with attorney's fees, interest and punitive damages.

The claims are the first of approximately 15 investor claims that Stoltmann Law Offices expects to file against Morgan Keegan in upcoming weeks.

The funds owned by the complaining investors include Morgan Keegan Select Intermediate Bond Fund, Regions Morgan Keegan Select High Income and closed-end funds RMK Multi Sector High Income Fund, RMK Strategic Income Fund, RMK Advantage Income Fund and the RMK High Income Fund.

According to the FINRA statements of claim, the Morgan Keegan funds were heavily invested in collateralized bond obligations, collateralized loan obligations, and collateralized mortgage obligations, collectively referred to as "collateralized debt obligations" or "structured financial instruments."

These securities are typically thinly traded – in other words, market quotations for these securities are not readily available – and are practically illiquid. As a consequence, the values of these securities can only be estimated by Morgan Keegan.

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