Regions Bank 2011 Annual Report Download - page 239

Management, Inc. (“Morgan Asset Management”). Morgan Asset Management no longer manages these Funds,
which were transferred to Hyperion Brookfield Asset Management in 2008. Certain of the Funds have since been
terminated by Hyperion. The complaints contain various allegations, including claims that the Funds and the
defendants misrepresented or failed to disclose material facts relating to the activities of the Funds. Plaintiffs
have requested equitable relief and unspecified monetary damages. No classes have been certified. Certain of the
shareholders in these Funds and other interested parties have entered into arbitration proceedings and individual
civil claims, in lieu of participating in the class actions. These lawsuits and proceedings will be subject to the
indemnification agreement with Raymond James Financial, Inc. discussed in Note 25 “Subsequent Event”.
In July 2009, the Securities and Exchange Commission (“SEC”) filed a complaint in U.S. District Court for
the Northern District of Georgia against Morgan Keegan alleging violations of the federal securities laws in
connection with auction rate securities (“ARS”) that Morgan Keegan underwrote, marketed and sold. The SEC
sought an injunction against Morgan Keegan for violations of the antifraud provisions of the federal securities
laws, as well as disgorgement, financial penalties and other equitable relief for customers, including repurchase
by Morgan Keegan of all ARS that it sold prior to March 20, 2008. Beginning in February 2009, Morgan Keegan
commenced a voluntary program to repurchase ARS that it underwrote and sold to the firm’s customers, and
extended that repurchase program on October 1, 2009 to include ARS that were sold by Morgan Keegan to its
customers but were underwritten by other firms. On June 29, 2011, Morgan Keegan announced the final phase of
the repurchase program to include ARS issued by Jefferson County, Alabama that were sold by Morgan Keegan
to its customers. As of December 31, 2011, customers of Morgan Keegan owned approximately $25 thousand of
Jefferson County ARS and approximately $650 thousand of other ARS, while Morgan Keegan held
approximately $135 million of ARS on its balance sheet. On June 28, 2011, the Court issued a summary
judgment in favor of Morgan Keegan in this case. The SEC has appealed that judgment. Previously on July 21,
2009, the Alabama Securities Commission issued a “Show Cause” order to Morgan Keegan arising out of the
ARS matter that is the subject of the SEC complaint described above. The order requires Morgan Keegan to
show cause why its registration as a broker-dealer should not be suspended or revoked in the State of Alabama
and also why it should not be subject to disgorgement, repurchasing all ARS sold to Alabama residents and
payment of costs and penalties. These matters will be subject to the indemnification agreement with Raymond
James Financial, Inc. discussed in Note 25 “Subsequent Event”.
In April 2009, Regions, Regions Financing Trust III (the “Trust”) and certain of Regions’ current and
former directors, were named in a purported class-action lawsuit filed in the U.S. District Court for the Southern
District of New York on behalf of the purchasers of trust preferred securities offered by the Trust. The complaint
alleges that defendants made statements in Regions’ registration statement, prospectus and year-end filings which
were materially false and misleading, and seeks equitable relief and unspecified monetary damages. On May 10,
2010, the trial court dismissed all claims against all defendants in this case. On August 23, 2011, the Second
Circuit Court of Appeals affirmed the dismissal. On September 6, 2011, the plaintiffs moved for a rehearing, but
that motion was denied on October 17, 2011. Any appeal to the U.S. Supreme Court is due to be filed by
March 15, 2012.
In October 2010, a purported class-action lawsuit was filed by Regions’ stockholders in the U.S. District
Court for the Northern District of Alabama against Regions and certain former officers of Regions. The lawsuit
alleges violations of the federal securities laws, including allegations that statements that were materially false
and misleading were included in filings made with the SEC. The plaintiffs have requested equitable relief and
unspecified monetary damages. On June 7, 2011, the trial court denied Regions’ motion to dismiss this lawsuit.
This case is still early in its development and no class has been certified.
Regions has received inquiries and subpoenas from government authorities primarily concerning accounting
matters from 2009 and earlier periods that also have been the subject of the civil litigation mentioned above.
Regions is cooperating in providing responses to these inquiries and subpoenas. In addition, the Board of
Directors is conducting investigations regarding certain of the matters raised in these inquiries and subpoenas.
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