NEW YORK A New York trial court has thrown out a petition by Morgan Keegan & Co to overturn a securities arbitration ruling made in favor of a professional sports agent.
The court ruled that it did not have jurisdiction to hear Morgan Keegan's case, which names sports agent W. Kyle Rote Jr. as a defendant. His company, Athletic Resource Management, has represented star clients such as New York Jets quarterback Tim Tebow. The decision, by Manhattan Supreme Court Justice Eileen Bransten, was filed on Wednesday.
In February, a Financial Industry Regulatory Authority panel ordered Morgan Keegan, bought by Raymond James Financial Inc in April, to pay Rote and his wife, Mary Lynne, $400,000 for losses tied to a group of money-losing bond funds.
The funds became the subject of state and federal regulatory actions - including recent charges against the funds' former board by the U.S. Securities and Exchange Commission. Morgan Keegan agreed to pay a $200 million fine to regulators in 2011.
Morgan Keegan has faced more than 1,000 customer arbitration cases over the bond funds, which invested in risky mortgage-backed securities and were marketed as being safe. Some of those cases are still winding through FINRA's arbitration system.
Arbitration awards are typically binding. Parties can ask courts to overturn them in limited circumstances, such as when arbitrators misapply the law. Morgan Keegan has been particularly aggressive with this strategy, filing numerous court cases to overturn rulings in favor of the fund investors.
A spokesman for Raymond James declined to comment. A spokesman for Regions Financial Corp, which previously owned the brokerage and retains financial responsibility for the bond fund cases, declined to comment.
(Reporting by Suzanne Barlyn; Editing by Jennifer Merritt and Dale Hudson)