Horace Grant v. Morgan Keegan
N/AOUTCOME: Arbitrators awarded $1.5 million for fraud and misrepresentation and omission involving mutual funds.
Former Chicago Bull Horace Grant won a $1.46 million arbitration award against Morgan Keegan & Co. for losses in some bond mutual funds, the largest victory against the brokerage firm to date for his C ... hicago-based lawyer. The award represents nearly all of the unrealized losses Grant allegedly suffered as of January 2008, said his attorney, Andrew Stoltmann, who received notice of the award on Friday. Grant, who played with the Bulls from 1987 to 1994 when they won three NBA championships, had alleged that Morgan Keegan, a Memphis, Tenn.-based broker, sold him four high-yield bond funds with more risk in them than he was told. He initially invested about $3 million with Morgan Keegan eight years ago, Stoltmann said. Morgan Keegan marketed the funds as conservative investments appropriate for retirees who were looking to protect their principal, Stoltmann said. In 2007, the four funds plummeted by an average of 58 percent, according to Grant’s complaint filed in March 2008 with the Financial Industry Regulatory Authority, or Finra, which runs the arbitration forum for investors. Similar bond funds lost 6.9 percent that year, the complaint said. The Morgan Keegan funds were clobbered by the meltdown in sub-prime residential mortgages, largely because they invested in risky debt-related securities and other mortgage-related holdings. Stoltmann claimed that Morgan Keegan failed to disclose the funds’ large concentrations of such securities, an allegation that the brokerage firm had denied.
