On June 22, 2011, the SEC announced that that Morgan Keegan & Company and Morgan Asset Management had agreed to pay $200 million to settle fraud charges related to subprime mortgage-backed securities. The settlement required Morgan Keegan to pay a total of $100 million to the SEC to be placed into a Fair Fund for the benefit of investors harmed by the violations, and to pay a separate $100 million into a state fund that also would be distributed to investors. 

The $100 million paid to the state fund was distributed by the states (Tennessee, Alabama, Mississippi, South Carolina, and Kentucky) last year. The $100 million paid to the SEC Fair Fund, however, has not gone out to investors--and this is starting to cause Mississippi, in particular, to rock the boat.

Several Morgan Keegan victims in Mississippi have filed a lawsuit against the SEC over the delay seeking to compel the agency to release the victim's money. In a statement today, Mississippi Secretary of State Delbert Hosemann, the state's securities regulator, said that his office had has filed an Amicus Curiae in support of the lawsuit in U.S. District Court in Jackson. "Injured Mississippi investors have been stopped from receiving their own money by their own government," Hosemann stated. He noted that some of the state's investors had died while waiting on the distribution, and many others were elderly and on fixed incomes.  

The SEC Fair Funds website for the Morgan Keegan settlement shows that the Enforcement Division did submit a Proposed Plan of Distribution to the Commission on April 3, 2013. On July 23, however, the Enforcement Division requested an extension of time, until August 23, 2013, for the SEC to enter an order approving or disapproving the proposed plan. The request explained that "due to the complexity of the comments received, the Division believes that further evaluation, analysis and consultation with other offices are required to properly address the comments submitted to the Commission."

Secretary Hosemann, however, is not interested in hearing about any further "evaluation, analysis and consultation" by the SEC. He called the current wait of well over two years "inexcusable."  "As a last resort, he said, "I find this lawsuit necessary and support this action to order distribution."

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