FINRA, the Securities and Exchange Commission and five state regulators from Alabama, Kentucky, Mississippi, South Carolina and Tennessee announced Thursday that they have settled with Morgan Keegan over improper bond fund sales. As a result, Morgan Keegan will repay $200 million to investors in seven affiliated bond funds, including the Regions Morgan Keegan Select Intermediate Bond Fund.

From January 2006 to the end of September 2007, Morgan Keegan marketed and sold the Intermediate Fund to investors using sales materials that contained exaggerated claims, failed to provide a sound basis for evaluating the facts regarding the fund, were not fair and balanced and did not adequately disclose the impact of market conditions in 2007 that caused substantial losses in the fund, FINRA said.

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