Official: US agency ignoring fraud victims
EMILY WAGSTER PETTUS,Associated Press
Aug 14, 2013 at 3:58 PM
JACKSON, Mississippi (AP) — The U.S. Securities and Exchange Commission has failed to distribute $100 million to 39,000 investors across America who lost money because of fraud by a financial firm, a Mississippi official said Wednesday.
Mississippi Secretary of State Delbert Hosemann said Wednesday that the U.S. agency has ignored repeated inquiries about the money.
"There is no reasonable excuse for this," Hosemann said at a news conference.
Morgan Keegan & Co. and Morgan Asset Management, both based in Memphis, Tennessee, agreed in June 2011 to pay $200 million to settle civil fraud charges that it overstated the value of mortgage investments in 2007, as the housing market was collapsing. Regulators said the firms lured investors with false sales materials for five funds that lost an estimated $1.5 billion.
Under the settlement, half the money was to be distributed to the victims by the 50 U.S. states and the other half by the SEC. Hosemann said all 50 states distributed $100 million to victims in 2012, but the other $100 million remains in a fund at the federal agency.
The SEC did not immediately respond to an Associated Press email seeking response to Hosemann's comments.
Hosemann's brief says the SEC has given itself several extensions of time to consider how to handle distribution of the money from the Morgan Keegan settlement. The most recent extension came July 22, when the SEC gave itself another 30 days. That time has not expired.
As secretary of state, Hosemann regulates the sale of securities.