Morgan Keegan's Status with Regions Questioned
Davis, Paul, American Banker
Regions Financial Corp. could be more open to selling Morgan Keegan & Co. Inc. should the brokerage unit continue to draw scrutiny for its management of funds hit hard by the subprime meltdown, analysts say.
Regions said in a filing Wednesday it had gotten requests from the Securities and Exchange Commission in recent months for information on lawsuits filed against the company and Morgan Keegan, whose president and CEO, G. Douglas Edwards, abruptly announced Wednesday plans to retire in April. Regions said in a press release John C. Carson Jr. will replace Mr. Edwards as CEO and R. Patrick Kruczek will become the unit's president and chief operating officer.
The lawsuits, filed in U.S. District Court in Tennessee from December to February, allege certain Morgan Keegan funds misrepresented or didn't disclose material facts related to their activities.
Regions spokesman Tim Deighton said the $141 billion-asset Birmingham company has a "strong and open relationship" with regulators and it is supplying the information requested. He would not comment further and a call to Morgan Keegan was not returned.
Jeff Davis, an analyst at First Horizon National Corp.'s FTN Midwest Securities Corp., said Wednesday the lawsuits and the SEC request could revive lingering concern that Regions "may throw Morgan Keegan under the bus ... or put a tight noose around the organization." He said, the unit's management team is "under a lot of pressure" from Regions.
"The concern has been that the bank would get heavily involved with Morgan Keegan if it stumbled," Kevin Fitzsimmons, an analyst at Sandler O'Neill & Partners LP, said in an interview. …