Regions Replaces Morgan Keegan CEO, Gets SEC Query

By Jonathan Stempel

NEW YORK (Reuters) - Regions Financial Corp (RF.N) said it is replacing the chief executive of its Morgan Keegan & Co unit, and has received information requests from the U.S. Securities and Exchange Commission concerning Morgan Keegan mutual funds whose values sank in the credit crisis.

Regions, a large U.S. Southeast regional bank based in Birmingham, Alabama, named John Carson chief executive of Morgan Keegan, its brokerage and investment banking unit.

Carson, 51, joined the unit in 1994 as president of fixed-income capital markets. He will replace Doug Edwards, 56, who is retiring after 30 years at the company, Regions said.

Several bond funds operated by Morgan Keegan in 2007 lost more than 50 percent of their value from exposure to complex debt, often tied to mortgages, and investor redemptions. It is rare for bond funds to suffer annual losses of that magnitude.

In its annual report filed with the SEC, Regions said the agency is seeking information concerning matters addressed in several lawsuits over the funds. The lawsuits generally seek class-action status on behalf of investors who claim they were misled or not told about the funds' risks.

One Morgan Keegan fund, Select Intermediate Bond A MKIBX.O, fell 50.3 percent last year, and saw assets shrink to $53 million from $342 million, Morningstar Inc said. Another fund, Select High Income A MKHIX.O, fell 59.7 percent last year, as assets plummeted to $43 million from $558 million.

Through Tuesday, the intermediate fund had fallen another 32.5 percent in 2008, while the high income fund was down 14.8 percent, Morningstar said. Prior to 2007, neither had lost money in any calendar year since their creation in 1999, Morningstar said.

Regions took a $38.5 million fourth-quarter charge related to asset management operations. It did not on Wednesday immediately return requests for comment.

Shares of Regions closed 3 cents higher at $23.22 on the New York Stock Exchange.

(Editing by Derek Caney and Braden Reddall)