The U.S. Securities and Exchange Commission issued an order against Morgan Keegan & Co. Inc. concerning late trading of mutual funds.

Morgan Keegan consented to the order without admitting or denying the order’s findings. The order finds that, between May and September 2003, representatives from the broker-dealer executed approximately 90 late trades in mutual funds on behalf of a hedge fund adviser, contrary to the firm’s policies.

After being told that it could place trades up to 5:30 p.m. ET, the hedge fund adviser began actively late trading. For both fund families involved, Morgan Keegan was party to contractual dealer agreements that allowed it to effect transactions in the funds on behalf of its customers and that obligated it to abide by the terms of the relevant prospectuses.

The SEC ordered Morgan Keegan to cease and desist, to pay US$418,834.93 in disgorgement, representing the fees it earned from the hedge fund relationship, US$39,972.06 in prejudgment interest and a US$100,000 civil penalty.