The Office of Secretary of State Jason Kander has filed a civil enforcement action against Memphis, Tennessee-based Morgan Keegan and against 10 of its employees who worked on the sale of 39-million in bonds for the scrapped Mamtek sugar refinery at Moberly.
Morgan Keegan issued $39 million in bonds for the project. Kander is seeking $6.7 million in restitution for Missouri investors and $15 million in civil penalties.
Kander accuses the firm of securities fraud.
“If not for Morgan Keegan’s failure to satisfy basic due diligence standards, we wouldn’t be here today,” Kander tells Missourinet. “Had they done that it would have revealed to Missouri investors that Mamtek’s promises were false, and so in addition to failing to perform adequate due diligence during their underwriting of the bonds … Morgan Keegan exclusively sold the bonds in and out of Missouri and misrepresented the facts, and provided false information about the offerings.”
Secretary of State’s Office Communications Director Laura Swinford says the petition alleges Morgan Keegan failed to independently verify material facts, such as, “Mamtek’s financial ability to contribute to the construction of the sucralose facility, the existence of patents on the sucralose producing technology and the purported sucralose facility in China.”
The civil enforcement action was filed in Boone County Circuit Court, where the largest single bondholder is located.
Kander’s office also seeks to have Morgan Keegan barred from underwriting any more bond issues in Missouri until it hires an independent consultant to review its due diligence policies.
When Kander was in the House, he was a member of the Special Standing Committee on Government Oversight and Accountability, that investigated the Mamtek project as it had been in line for more than $17-million in state subsidies.
The Chairman of that Committee, Jay Barnes (R-Jefferson City), says he is, “pleased to see actions to hold those accountable responsible.”