Regions Financial Faces SEC - Analyst Blog

Regions Financial (RF) may face charges from the U.S. Securities and Exchange Commission (SEC) for possible violation of the federal securities laws associated with mutual funds that were formerly managed by Morgan Asset Management.

Regions Financial disclosed in an SEC filing yesterday that Morgan Keegan & Company, Inc., a wholly owned subsidiary of Regions Financial, Morgan Asset Management, Inc. and three employees have each received a “Wells” notice from the Atlanta Regional Office of the SEC.

A Wells notice is neither a formal allegation nor a discovery of wrongdoing. The company receiving a Wells notice will have a chance to justify itself before being condemned. Regulators are investigating the roles of the fund managers in the credit crisis.

Last month, State Street Corp. (STT) had disclosed that it had received a Wells notice related to certain fixed income strategies. The strategies were finally backed by subprime mortgages that absorbed massive losses. Last year, large banks including JP Morgan Chase (JPM), Morgan Stanley (MS), Citigroup (C), Wachovia (now owned by Wells Fargo − (WFC) and Merrill Lynch (now owned by Bank of America − (BAC) had agreed to buy back auction-rate securities from investors as part of industry-wide settlements with federal and state regulators. The settlements involved securities abuses by the firms.