Memphis sports agent W. Kyle Rote Jr. was awarded $400,000 on Friday to make up for money lost in Morgan Keegan & Co.’s failed mutual funds.
Rote earlier had requested $954,000 at an arbitration hearing convened in Memphis by the Financial Industry Regulatory Authority.
The arbitration panel ruled Friday, deciding the Memphis investment firm must turn over $400,000 to Rote within 30 days.
Morgan Keegan said it will appeal Friday’s decision.
“The Rote case stands in sharp contrast to a number of recent decisions that have come down in the last month with zero awards,” Morgan Keegan spokesman Eric Bran responded in an e-mail.
The award appears to be the largest arbitration judgment against Morgan Keegan since its mutual funds collapsed in 2007 and 2008.
Morgan Keegan asserts the credit markets froze and made it impossible to sell assets in the funds.
Peter Mougey, a lawyer in Pensacola, Fla., representing Rote, said Friday’s judgment supports the view that Morgan Keegan misled investors, including employees such as Rote.
“After a thorough review of tens of thousands of pages of documents, the FINRA arbitration panel concluded Morgan Keegan withheld vital information from their employees as they were making investment decisions,” Mougey contends.
Morgan Keegan bought Rote’s sports agency in 1995 and continued to employ him. He invested in Morgan Keegan’s once high-flying mutual funds.
The funds lost value when the nation’s housing market collapsed. By last December, 331 investors had tried to recover lost money in arbitration, claiming Morgan Keegan misled them.
While about half of those claims were rejected, winning investors were awarded $16.4 million, Morgan Keegan reported.
Morgan Keegan bought Athletic Resource Management Inc. in 1995. Rote had formed the sports agency with James E. Sexton III.
Rote, 61, could not be reached for comment.
A well-known sports figure in Memphis, Rote was inducted in 2010 into the National Soccer Hall of Fame. He is the son of Kyle Rote, a star professional football player in the 1960s.
Morgan Keegan also faces two class-action lawsuits from mutual fund investors claiming more than $1 billion in losses.
The firm is owned by Regions Financial Corp. of Birmingham, Ala.
Regions is selling the Memphis company to Raymond James Financial Inc. Regions has earmarked about $300 million for litigation expenses and pledged to pick up costs over that amount.