February 8, 2016 
Contact: Stephanie Fleming, (573) 526-0949

Kander Announces $850,000 Settlement with Morgan Keegan for Securities Fraud Related to Mamtek Bonds


Jefferson City, Mo. — Secretary of State Jason Kander today announced a settlement with Morgan Keegan & Co., Inc. for its involvement in the sale of bonds meant to fund the Mamtek sucralose factory in Moberly, Mo. Those bonds defaulted shortly after Morgan Keegan sold them. As a result of the settlement, Morgan Keegan will pay $750,000 to Missouri’s general revenue fund and repay the state for the cost of the investigation, for a total of $850,000. Morgan Keegan has hired an expert to review its municipal bond underwriting procedures and will implement any suggested changes by Kander’s office, which will help prevent this situation from happening again.

“I’m pleased Morgan Keegan has taken responsibility for its role in this debacle by not only agreeing to a settlement with my office, but by previously returning money to investors that had lost their savings in the Mamtek scheme,” Kander said. “There were a number of individuals and companies that could and should have stopped the Mamtek scam from happening, including Morgan Keegan, so I am glad my office worked so hard for years to ensure the parties answerable for Missourians losing millions in savings were held accountable. My office will continue to make sure that financial institutions do business in a responsible, ethical way in Missouri.”

In 2010, the City of Moberly issued $39 million in bonds to finance the Mamtek sucralose factory’s construction. The plan was for Moberly to make the required payments on the bonds with money Mamtek would pay it from the operation of the sucralose facility. Morgan Keegan helped Moberly prepare its bond offering and sold the bonds to the public at a profit.

In 2013, Kander filed a lawsuit in Boone County Circuit Court against Tennessee-based Morgan Keegan, alleging that the company failed to adequately investigate the feasibility of Mamtek's business plan, misled investors about investigation findings, and failed to inform them of significant risks of the bonds. Specifically, the lawsuit alleged that Morgan Keegan misrepresented to investors that their bonds were secured by valid Mamtek patents, when in reality, Mamtek did not have any patents at the time of sale.

In fact, one of the patent applications that served as collateral for the bonds was denied in May 2010, two months before Morgan Keegan began selling the bonds. The bonds themselves did not guarantee Moberly would make payments if Mamtek failed to pay, but the lawsuit alleged Morgan Keegan falsely told some investors that would be the case. Further, the lawsuit alleged Morgan Keegan failed to disclose information regarding Mamtek's financial condition and its ability to construct and operate sucralose facilities.

Since Kander filed his lawsuit, Morgan Keegan has settled separately with Missouri investors who lost millions. With all Missouri investors compensated, Kander’s settlement focused on ensuring future securities offerings were adequately vetted at Morgan Keegan.


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