Morgan Keegan Rapped In Madoff Feeder Fund Case

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.

In Depth

Related-Company Fees: Normal Industry Practice or Conflicted Compensation?

Nov 11 2015 | 4:23pm ET

Regulatory agencies as well as investors are increasingly exploring whether certain...


Ferrari Roars in Wall Street Debut

Oct 21 2015 | 4:28pm ET

Shares of supercar maker Ferrari jumped as much as 15 percent to a high of nearly...

Guest Contributor

Private Debt - What is the Opportunity?

Nov 11 2015 | 3:28pm ET

In this contributed article, Rob Allard, founding partner of Firebreak Capital...


Editor's Note

    Oct 21 2015 | 10:41am ET

    One of the most unique charity benefits in the hedge fund industry, A Leg To Stand On's (ALTSO's) Hedge Fund Rocktoberfest - NYC, raised nearly $500,000 last Thursday thanks to the generous support of major sponsors and nearly 1,400 attendees from the Tri-State finance, business and hedge fund communities. Read more…