Sunday, 30 April 2017
Last updated 1 day ago
Mar 9 2011 | 12:05pm ET
An arbitration panel blasted Morgan Keegan for investing all of a client's assets in a Bernard Madoff feeder fund, calling the firm "grossly negligent."
The Financial Industry Regulatory Authority panel awarded Jeffrey and Marisel Lieberman more than $265,000, finding very little to recommend about the job Morgan Keegan did for the couple. The arbitrators wrote that "there is clear and convincing evidence" that "Morgan Keegan was grossly negligent in not performing substantial due diligence and as a result it fraudulently misrepresented the risk of this investment."
Morgan Keegan had put all of the Lieberman's $200,000 into a Fairfield Greenwich Group fund that invested all of its assets with Madoff, in spite of that fact that its own policies appear to have precluded a hedge fund investment for the Liebermans, who had listed "speculation" as their least-important investment objective.
But while Morgan Keegan took a beating, the Lieberman's financial adviser, Julio Almeyda, was cleared.
Morgan Keegan was ordered to repay the Liebermans their full investment, plus 6% annualized interest, as well as $50,000 in damages and $14,000 to cover the costs of the Liebermans' expert witnesses.