Pearson 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.