Morgan Keegan & Co. has asked a federal court to resolve its dispute with retired basketball player Horace Grant over $333,000 in interest that Grant says the brokerage owes him on a $1.46 million arbitration award, according to court documents.
Morgan Keegan on Monday filed a motion in U.S. District Court for the Central District of California for an acknowledgment that it has satisfied its monetary obligation to Grant in a long-running legal dispute.
Morgan Keegan, a unit of Raymond James Financial Inc. , is refusing to pay Grant $333,000 in interest that Grant says he is owed on a 2009 Financial Industry Regulatory Authority arbitration award. The brokerage, in court documents , said it already paid Grant $1.59 million and that an interest calculation by Grant's lawyer is wrong.
Grant's arbitration complaint against Morgan Keegan stemmed from losses in bond funds that invested in risky mortgage-backed securities and were marketed as being safe. The funds later lost as much as 80 percent as the subprime market imploded. The brokerage has paid a $200 million civil regulatory fine over the funds, and a star manager at the firm was banned from the securities industry.
Morgan Keegan went to federal court in 2009 where it waged a three-year, unsuccessful battle to overturn Grant's award, which included $1.45 million in damages and $10,000 in costs.
At issue in the Grant case is what interest rate applies for a two-year period during which the case was pending before the federal appeals court -- a 10 percent state rate of interest or a 0.29-percent federal rate.
"The firm engages in scorched earth litigation tactics," said Andrew Stoltmann, a Chicago-based lawyer who represents Grant.
In November, Stoltmann requested that FINRA, Wall Street's industry-funded watchdog, suspend Morgan Keegan's license for not complying with the terms of the arbitration ruling.
The U.S. Securities and Exchange Commission, also on Monday, filed civil charges against eight former board members of mutual funds run by Morgan Keegan, including one of the firm's founders, saying they failed to oversee managers in the same troubled bond funds who inaccurately priced toxic mortgage-backed assets leading up to the financial crisis.
(Reporting By Suzanne Barlyn; Editing by Leslie Adler)