Tuesday, May 19, 2009
Hannan / The Economy More Bond Betrayal: SEC Investigating Morgan Keegan
Posted by Caleb Hannan on Tue, May 19, 2009 at 6:59 AM
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According to the Birmingham News, the Securities and Exchange Commission is investigating Memphis-based bond giant Morgan Keegan. The SEC sent Morgan Keegan a "Wells notice," which in regulator speak translates to Unplug the shredder or we'll lock you up.
Maybe you've seen this. Maybe you haven't. Maybe you could care less. But one thing you should know: This little depth charge from the SEC has nothing to do with the shady stuff you read about in last month's New York Times article. At least not yet.
At the moment, all the SEC is doing is investigating whether or not Morgan Keegan sold securities "after its ability to support auctions was diminished." In a nutshell, the SEC is accusing Morgan Keegan of giving bad advice. Of selling these securities long after it was apparent that banks no longer wanted to buy them back. Of screwing themselves and their customers in the long-run in favor of short-term success. Basically, of recreating the history of Wall Street in microcosm.
The customers in question here are mostly East Tennessee counties, like Blount and Sevier. Cities like Lewisburg, the victims of that deceptive haberdashery we mentioned last week, have yet to find a voice amongst government regulators.
But have no fear. The government tends to be methodical in these sorts of examinations. And this is likely to be but the first poke in a full-body federal check-up. As Karen Carpenter sang, We've only just begun...
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