US based Shelter Insurance has filed a $390m lawsuit against the investment banker Morgan Keegan & Co accusing that the Memphis failed to carry its legal duty to protect investors when it sold bonds issued for the failed Mamtek project in Moberly.
The Insurance company said that in July 2010, it purchased $5.6m of the $39m bond issue used to finance construction and equipment for the proposed artificial sweetener plant.
According to the case filed in Cole County Circuit Court, Shelter claims that the sales materials were repeated and used inflated financial projections and numerous other false claims from Mamtek to attract investors, as reported by Columbia Tribune.
Acting as a underwriter for the bonds, Morgan Keegan pocketed $411,000, issued by Moberly and that it would use its revenue from the company to make the bond payments.
Aylward & Bandy LLC of Kansas City attorney Robert Horn of Horn said that the defendants’ conduct and actions in providing untrue and misleading information without conducting any reasonable inquiry into the underlying facts constitutes conscious indifference or reckless disregard for the truth and for the rights of third parties.
The investment banking firm acquired the entire issue from Moberly, then disposed the bonds to investors.
Shelter has sought disciplinary damages of 10 times the amount of the bond issued, and also to start a jury trial which would return its original investment and force Morgan Keegan, Armstrong Teasdale and Boatman to forfeit the money they made on the deal.