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Robert Trigaux

Is this the day Raymond James Financial says it's buying Morgan Keegan for nearly $1 billion?



UPDATE WEDNESDAY AFTERNOON: Yes, Raymond James is buying Morgan Keegan: Here's the RayRay press release.


Wake up and good morning. The alleged horse race appears to be near the finishing line between St. Petersburg's Raymond James Financial and Stifel Financial Corp. of St. Louis to buy Morgan Keegan, the investment firm subsidiary of the banking company Regions Financial.

Speculation is RayJay may unveil its Memphis-based Morgan Keegan deal today (Wednesday). Venture's been monitoring the buzz on this deal since before Christmas. Nobody's talking yet.

Raymond James in lead to buy Morgan Keegan, says a Reuters headline.

Raymond James Said to Near $930 Million Purchase of Broker Morgan Keegan, says this Bloomberg News story.

If Raymond James is the winner, the brokerage will add 1,200 Morgan Keegan financial advisors to the 5,400 it already has. Morgan Keegan has more than 300 offices across the southeast and midwest, including Texas, Missouri, Ohio, the Carolinas and Florida. It has more than 3,100 full-time employees. So it's a big shot in the arm for Raymond James, if this happens.

Here's another indicator something's going to happen. Regions said in June it hired Goldman Sachs Group Inc. to seek a buyer for Morgan Keegan. Regions needs to bolster capital and repay a $3.5 billion U.S. bailout. Region's government debt is the largest still outstanding for any institution under the Treasury’s bank-rescue program.

Interestingly, if the numbers in the business press are accurate and Raymond James is offering $930 million or so, the deal will not be much more than the $812 million Regions paid a decade ago to buy Morgan Keegan. Still, the Tennessee firm ranked as one of the nation's largest lead underwriters of municipal securities in the first half of 2011. And seven of its equity research analysts were chosen as being among the best in the nation in two surveys conducted by the Financial Times and The Wall Street Journal. Read this notable Daily News (a Memphis paper) take on Morgan Keegan.

There is a darker history to Morgan Keegan, too. Raymond James knows this (one reason for the lower price to buy the firm) but readers should be aware, too. Regulators say Morgan Keegan overstated the value of mortgage investments just as the housing market was collapsing and lured buyers of its funds with false sales materials. Read more from AP.

The saga is well described in a recent piece in Memphis's daily newspaper, the Commercial Appeal. It says that in 2007, back when Wall Street imploded, mutual funds marketed nationwide by Morgan Keegan lost $1.9 billion in value. 

"Alabama regulators set off state probes that spurred fraud charges by the U.S. Securities and Exchange Commission." the Appeal reported. "Last June, the SEC shelved charges and settled. Morgan Keegan accepted a $210 million fine. No wrongs were ever proved or admitted.

"Much of what went on since has been widely reported: Two separate class-action lawsuits by investors are pending in Memphis federal district court. Morgan Keegan was put up for sale."

The story tells of rogue investing, excessive risk taking in things like collateralized debt obligations (CDOs) and poor oversight at Morgan Keegan. Things we know a Raymond James would make darn sure were fixed prior to taking on such a big addition to its holdings.

Let's see if an announcement is forthcoming.

-- Robert Trigaux, Business Columnist, Tampa Bay Times





[Last modified: Wednesday, January 11, 2012 4:49pm]


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