The Securities and Exchange Commission yesterday filed securities fraud charges against Memphis-based Morgan Keegan & Co. for misleading thousands of investors about the liquidity risks associated with auction-rate securities, while Alabama regulators took initial steps to ban the firm from doing business in the state.

In a four-count, 27-page complaint filed in federal court in Atlanta, the SEC said Morgan Keegan officials knew of widespread liquidity problems in the market, beginning in late 2007, but failed to disclose them to its customers. The SEC said it is seeking a court order that would require Morgan Keegan to buy back illiquid ARS from its customers.

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