Pearson Simon & Warshaw, LLP and Labaton Sucharow LLP filed a class
action lawsuit on May 19, 2010 in the U. S. District Court for the Western
District of Tennessee on behalf of all persons who purchased or otherwise
acquired shares in the following closed-end mutual funds (collectively,
"Funds") between June 6, 2005 and July 14, 2009:
RMK Advantage Income Fund ("RMA")
RMK Strategic Income Fund ("RSF")
RMK High Income Fund ("RMH")
RHY Multi-Sector High Income Fund ("RHY")
The
complaint seeks damages under Sections 10(b) and 20(a) of the Securities Exchange
Act of 1934, and names as defendants Morgan Keegan & Co., Inc., Morgan
Asset Management, Inc., Regions Financial Corp., RMK Advantage Income
Fund, Inc., RMK Strategic Income Fund, Inc., RMK High Income Fund, Inc.,
RHY Multi-Sector High Income Fund, Inc., Carter E. Anthony, Allen B. Morgan,
Jr., Joseph Weller, James Stillman R. Mcfadden, Archie W. Willis, III,
Mary S. Stone, W. Randall Pittman, J. Kenneth Alderman, J. Thompson Weller,
James C. Kelsoe, Jr., David H. Tannehill, Jack R. Blair, Albert C. Johnson,
Charles D. Maxwell, and PricewaterhouseCoopers, L.L.P. (collectively,
"Defendants").
The
complaint alleges that Defendants concealed the Funds' investments in poor-quality,
asset-backed securities ("ABS"), leveraged many times over by
complex capital structures. Defendants affirmatively misrepresented that
the securities it held in the Funds were corporate bonds and preferred
stocks. Contrary to the Company's assertions that investors in the
Funds suffered losses as a result of a "mortgage meltdown," the
complaint alleges the Funds collapsed because they held concentrated holdings of
low-priority tranches of ABS. Defendants did not fully or accurately inform
investors in the Funds of the risks inherent in the subordinated ABS tranches
until after some $1 billion in losses were incurred. Defendants also misled
investors by repeatedly comparing the performance of the Funds to the
Lehman Brothers Ba U.S. High-Yield Index, which contained only corporate
bonds, wholly distinct from ABS. Defendants' conduct has prompted
regulatory enforcement actions or investigations by at least five state
regulators, FINRA, and the SEC.
If you would like a copy of the
complaint, please click
here.
If you would like to discuss this case with Pearson, Simon & Warshaw, please
contact us.