New York Times columnist Gretchen Morgenson reported on December 30, 2007, in an article entitled The Debt Crisis, Where It’s Least Expected, that the Indiana Children’s Wish Fund settled its subprime case against Morgan Keegan less than a month after the claim was filed. A coalition of law firms represented the Wish Fund: Page Perry, of Atlanta; Maddox Hargett & Caruso, P.C. of Indianapolis and New York; Aidikoff, Uhl & Bakhtiari of Beverly Hills, California; and David P. Meyer & Associates Co., L.P.A. of Columbus, Ohio.
These law firms filed the case on the Wish Fund’s behalf in November as an arbitration with the Financial Industry Regulatory Authority (FINRA). The Indiana Children’s Wish Fund is a charity that grants the wishes of children with life-threatening illnesses. The arbitration statement of claim describes how the Wish Fund invested approximately $220,000 in the Regions Morgan Keegan Select Intermediate Bond Fund. The funds had been previously invested in money market funds and a certificate of deposit. A Morgan Keegan agent recommended the bond fund as a completely safe and a smart business decision. “[T]he Wish Fund said it had lost $48,000 in a mutual fund from Morgan Keegan that had been invested in dicey mortgage securities,” according to the Morgenson article.
“The [subprime] crisis has generated almost $100 billion in losses or write-offs at the world’s largest financial institutions, cost a couple of Fortune 100 chief executives their jobs, wiped out billions of dollars in stock market value and hammered the reputations of the nation’s top credit rating agencies,” said Morgenson. “Still, the Wish Fund’s experience is instructive because so little has emerged about the losses that investors have incurred in these securities, perhaps because few holders have wanted to disclose them. Some investors may still not know how much they have been hurt by the crisis,” continued Morgenson. “As this debacle unfolds, accounts of investor losses in mortgage securities will come to light. And Wall Street’s role as the great enabler ? providing capital to aggressive lenders and then selling questionable securities to investors ? will be front and center,” concluded Morgenson.