A Baton Rouge Advocate news account said the $1-billionFirefighters’ Retirement System (FRS) n amed as defendants in the suitBirmingham-based Regions Bank, Memphis-based Morgan Asset Management Inc., and Christopher J. Burke, a Baton Rouge financial analyst for Regions. The suit alleges Regions, Morgan, and Burke encouraged the fund to invest in the Morgan Keegan High Income Fund without explaining the breadth of the fund’s investments in securities tied to subprime mortgages.
FRS officials say they thought the fund’s illiquid assets were limited to 15% of its portfolio. Instead, they contended in the suit, the fund boosted illiquid assets to approximately half of its portfolio.
“The collapse of the subprime mortgage market caused massive declines in the fund,” FRS officials said in the suit, adding that the fund sold its shares in May, losing a total of $49.7 million. Spokesmen for Regions and Morgan declined to comment on the dispute to the newspaper, as did Burke.
However, their attorneys said in court filings that they “specifically deny that FRS is entitled to recover any damages, including damages for lost profits and opportunities,” according to the news report.
The firefighters’ investments began in late 2004 and continued into early 2008.