It is being reported that Raymond James Financial, Inc. has agreed to acquire Morgan Keegan & Company. According to the reports, the cost of the deal was put at $930 million, making it the largest acquisition in the history of the publicly traded Raymond James. Apparently, the hundreds of arbitration claims filed against Morgan Keegan over the last few years by investors burned by bad investments did not dissuade Raymond James from paying close to a billion dollars to acquire the firm.
The merger is a strategic fit, with both firms operating similar business models. It was not disclosed how future litigation involving Morgan Keegan will be handled by the merger. In some cases broker-dealers sell their assets and not their liabilities – instead establishing a trailing insurance policy to cover any potential litigation matters. This may make it more difficult for Morgan Keegan investors to recoup any investment losses they have sustained.
The reports also indicated that Morgan Keegan CEO John Carson will join Raymond James Financial as president and will oversee Fixed Income and Public Finance.
Certainly, this is a huge step for Raymond James in the growth of its business and continues the trend of mergers and acquisitions amongst the independent broker-dealers.
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