Two high net worth clients have slapped FINRA arbitration complaints against Morgan Keegan and fund manager James Kelsoe over subprime-related losses in mutual funds.

The complaints allege fraud, misrepresentations and omissions related to Morgan Keegan and Kelsoe's failure to fully disclose risks associated with investing in subprime sectors, said Andrew Stoltmann of Chicago-based Stoltmann Law Offices, which lodged the complaints on behalf of the two Morgan Keegan clients, in a news release.

A spokesperson for Morgan Keegan was not immediately available for comment.

The claims, which seek to recover $1.8 million for one client and $285,000 for the other, are the largest individual claims to be filed against Morgan Keegan and the first to be filed naming Kelsoe, according to attorneys from Stoltmann Law Offices. Those claims, the lawyers said, are the first of about 15 investor claims they will file against Morgan Keegan in the coming weeks.

The funds mentioned in the complaint are the Morgan Keegan Select Intermediate Bond Fund, Regions Morgan Keegan Select High Income Fund, and closed-end funds RMK Multi Sector High Income Fund, RMK Strategic Income Fund, RMK Advantage Income Fund and the RMK High Income Fund.

The complaints do not name the Morgan Keegan advisors who recommended the bond funds because "we believe that the advisors at Morgan Keegan were misled about these investments, just as investors were," said Stoltmann. 

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