JEFFERSON CITY, Mo. (KSDK) - Missouri Secretary of State Jason Kander issued a cease and desist order against investment firm Morgan Keegan & Co. for its role in selling bonds tied to a failed artificial sweetener factory in Moberly.
The cease and desist petition claims Morgan Keegan failed to conduct its "due diligence" when investigating the feasibility of Mamtek's business plan regarding the construction of the sweetener factory and did not share the risks of investing in the company to those who purchased company bonds.
The City of Moberly issued more than $39 million in industrial development bonds to help defray facility construction costs. The sweetener factory was never completed, and the CEO of Mamtek U.S., Bruce Cole was accused of using bonds to avoid foreclosure on his Beverly Hills, California home.
Kander says Morgan Keegan lied to investors that their bond payments would be secured by Mamtek's patents, when, in fact, the company did not have any patents.
Morgan Keegan made approximately $2.5 million in the bond offering, according to the petition.
Morgan Keegan & Co., based in Tennessee, is part of Raymond James & Associates, Inc.