Regions Bank 2012 Annual Report Download - page 226

damages. These cases are in various stages and no classes have been certified. Settlement discussions are
ongoing in certain cases, and the Court has granted preliminary approval of a settlement in the closed-end Funds
class-action and shareholder derivative case. 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 are subject to the indemnification agreement with Raymond James
discussed above.
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. On June 28, 2011, the Court issued a summary judgment in favor of Morgan Keegan in this
case, and the SEC appealed that judgment. On May 2, 2012, the Eleventh Circuit Court of Appeals granted the
SEC’s appeal and remanded the case to the District Court. A bench trial was held before the District Court in
November 2012. On February 15, 2013, the Court entered a judgment in favor of the SEC and ordered Morgan
Keegan to pay a minimal civil monetary penalty and to repurchase all ARS that it sold to and is still held by
several of the plaintiffs. 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 are subject to
the indemnification agreement with Raymond James.
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.
On June 14, 2012, the trial court granted class certification. The Eleventh Circuit Court of Appeals is reviewing
the trial court’s grant of class-action certification. The case is now stayed pending that review.
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.
In December 2009, Regions and certain current and former directors and officers were named in a
consolidated shareholder derivative action filed in Jefferson County, Alabama. The complaint alleges
mismanagement, waste of corporate assets, breach of fiduciary duty and unjust enrichment relating to bonuses
and other benefits received by executive management. Plaintiffs requested equitable relief and unspecified
monetary damages. The case was dismissed with prejudice on December 6, 2012. Plaintiffs have filed a motion
to alter, amend or vacate that judgment.
In September 2009, Regions was named as a defendant in a purported class-action lawsuit filed by
customers of Regions Bank in the U.S. District Court for the Northern District of Georgia challenging the manner
in which non-sufficient funds and overdraft fees were charged and the policies related to posting order. The case
was transferred to multidistrict litigation in the U.S. District Court for the Southern District of Florida, and in
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