Nov 20 Wall Street's industry-funded watchdog,
FINRA, has notified Morgan Keegan & Co. that it will suspend the
brokerage's license for not complying with an arbitration ruling
in favor of retired basketball star Horace Grant unless the firm
meets certain conditions, according to a letter reviewed by
Morgan Keegan & Co., a unit of Raymond James Financial Inc.
, recently paid Grant $1.59 million in a bitter dispute
dating back to 2008. But Grant's lawyer said the brokerage owes
another $333,000 in interest.
"Morgan Keegan has paid in full the award rendered in the
Grant arbitration proceeding," the brokerage said in a statement
on Tuesday. The company's brokerage license is not in jeopardy,
The notice from the Financial Industry Regulatory Authority,
or FINRA, according to Morgan Keegan, is a standard response to
a request on Friday from Grant's lawyer, Chicago-based Andrew
Stoltmann, that FINRA suspend Morgan Keegan's license for
non-payment of an arbitration award.
Grant, a former Chicago Bulls forward, won a total of $1.46
million in a FINRA arbitration ruling against Morgan Keegan in
2009. Grant had invested in a group of bond funds that lost
nearly all of their value in 2008 during the financial crisis
triggered by the bursting of the housing bubble and the collapse
of the subprime mortgage market.
In June 2011, Morgan Keegan agreed to pay a fine of $200
million to settle fraud charges brought by the U.S. Securities
and Exchange Commission, state regulators and FINRA in
connection with the false valuation of subprime mortgage-backed
securities in five funds.
Since 2009, Morgan Keegan has tried to overturn the Grant
arbitration ruling in court. The case was ultimately heard by a
federal appeals court in California, where Morgan Keegan lost in
The brokerage has 21 days to respond to FINRA's notice and
may request a hearing, according to the letter from FINRA to
Morgan Keegan's compliance officer. Morgan Keegan could be
excused from having its license suspended if it pays the award
in full, settles with Grant, or meets certain other conditions,
according to the letter.
Morgan Keegan also intends to ask a court to determine if
more interest is owed, it said in a statement. That would block
further action by FINRA until the issue is resolved, the company