Two lawsuits and two FINRA arbitration claims filed against the executives, directors, chief compliance officer, portfolio managers and independent auditor of three open-end funds and four closed-end funds managed by an affiliate of Memphis, Tenn., broker/dealer Morgan Keegan & Co., may be the tip of the subprime iceberg for the mutual fund industry.

"I concur. There certainly is a lot below the surface," said William Sullivan, a partner and chairman of the national securities litigation group with Paul Hastings in Los Angeles. Sullivan is also a member of the firm's subprime task force, assembled in July. Mutual funds may very well be dragged into this, but whether investors will bring lawsuits remains to be seen, Sullivan added.

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