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Morgan Keegan on fraud charge

US regulators yesterday charged brokerage and investment banking group Morgan Keegan with fraud for overstating the value of subprime mortgages in its mutual funds, resulting in more than $1bn (£657m) of investor losses. The charges, brought by the Securities and Exchange Commission and the Financial Industry Regulatory Authority, also involved two individuals at the firm, portfolio manager James Kelsoe and accounting department head Joseph Thompson Weller. The complaint alleges that Morgan Keegan failed to properly price its mortgage holdings and “recklessly” sold shares of its funds to investors based on inflated prices.