The Securities and Exchange Commission (SEC) filed administrative proceedings against Morgan Keegan & Co. and Morgan Asset Management and two employees accused of fraudulently overstating the value of securities backed by subprime mortgages.

The SEC's division of enforcement alleges that Morgan Keegan failed to employ reasonable procedures to internally price the portfolio securities in five funds managed by Morgan Asset, and did not acccurately calculate the funds' net asset values (NAVs). Morgan Keegan recklessly published these inaccurate daily NAVs, and sold shares to investors based on the inflated prices, the SEC said.

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