Jul. 16--The staff of the Security and Exchange Commission intends to recommend the commission bring enforcement actions against Morgan Keegan & Co., Morgan Asset Management and three employees.

The so-called "Wells notice" was disclosed Wednesday by Regions Financial Corp., which owns the Memphis-based investment firm.

The three employees were not identified.

The action would be in response to possible violations of securities laws involving some mutual funds formerly managed by Morgan Asset Management.

The Wells notice gives Regions a chance to address the issues before formal action is taken.

Morgan Keegan has been battling scores of investors who lost up to 90 percent of their money in the collapse of about 10 mutual funds.

For example, Morgan Keegan accounted for about 15 percent of the 89 arbitration decisions nationwide announced in May by the Financial Institution Regulatory Authority.

Often, those investors allege Morgan Keegan recommended the funds without revealing the higher risks.

They also often allege that the firm recommended them to investors who, for reasons such as older age, relatively moderate income or a lack of sophistication in making investments, should have money invested in more conservative funds.

Regions spokesman Tim Deighton responded for the bank Wednesday, saying, "Given the ongoing market conditions affecting securities like these, this is obviously a point of interest for the SEC.

"While we are vigorously defending our position and practices, we have cooperated fully with the SEC and are working to resolve this promptly."

Of the 50 cases resolved so far in FINRA arbitration hearings, 25 have ended with no awards given to the investor, Deighton said, "with the remainder resulting in about $4 million in compensation to the claimants."

The Associated Press reported Wednesday that the SEC action appears to be part of a wider investigation of funds specializing in high-yield, fixed-income investments, or "junk" bonds.

In June, State Street Corp. disclosed that it had received a Wells notice involving an ongoing probe into disclosures and management of its fixed-income investments before the market fell.

Those investments involved securities and bonds backed by subprime mortgages, which are loans given to customers with poor credit history, the AP reported.

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