Securities & Exchange Comm. v. Morgan Keegan & Co., Inc., No. 11-13992 (11th Cir. 2012)
Annotate this CaseIn this civil enforcement action, the SEC sued Morgan Keegan, alleging that, in the critical time period of late 2007 and early 2008, Morgan Keegan's brokers (1) misrepresented that auction rate securities (ARS) were safe cash-equivalents with no liquidity risk and (2) despite myriad auction failures and significant trouble in the ARS market, continued to recommend ARS as short-term, liquid investments and failed to disclose the known liquidity risk. The court concluded that the district court erred in granting summary judgment for Morgan Keegan based on the "materiality" element of the securities violations charged. The court's holding was narrow and limited to materiality and did not address whether the SEC had met any other element of its claims or whether the SEC would ultimately prevail in the litigation. Accordingly, the court vacated and remanded.
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