Morgan Keegan’s parent company, Regions Financial Corp., scored a legal victory last week when an Alabama court dismissed a securities fraud lawsuit brought by a group of shareholders who allegedly lost money stemming from the collapse of the firm’s six RMK investment funds.

In the 6-1 opinion, the Supreme Court of Alabama ruled that the shareholders, who were individual investors, partnerships and others, couldn’t bring the suit directly against Regions, Morgan Asset Management and the funds’ manager James C. Kelsoe. Regions and its affiliated companies successfully argued that the claims in the lawsuit could only be brought as a derivative action. The ruling directed the trial court to go back and dismiss the lawsuit.

The shareholders allege that between December 2002 and July 2007, they were fraudulently induced to invest in one of the six RMK funds advised or managed by the defendants—Regions, Morgan Asset Management and Kelsoe.

The six funds lost a total of $2 billion between March 31, 2007 and March 31, 2008, the ruling stated.

“We conclude that the actions of [Morgan Asst Management] and Kelsoe first injured the RMK funds and only secondarily injured the shareholders,” the Alabama Supreme Court ruled. “Accordingly, in the absence of any distinct injury to the shareholders, the claims they now assert must be considered derivative claims belonging to the RMK funds, not direct claims.”

The court further stated: “This case does not involve the alleged breach of fiduciary duties related to a cash-out merger, and the shareholders are not suing the directors of the RMK funds; rather they are suing those responsible for the management of the RMK funds,” the Alabama Supreme Court wrote. “The shareholders are essentially seeking damages for fraud based on the defendants’ misrepresentations covering up their alleged mismanagement of the RMK funds. Court have generally rejected attempts by plaintiffs to covert traditionally derivative claims into direct claims based on the failure of the alleged guilty parties to disclose their bad acts.”

But, this court ruling is only one victory in a sea of litigation.

Since the collapse of the RMK funds, more than 20 lawsuits, including class actions, derivative lawsuits and individual actions have been filed against Regions, Morgan Asset Management and Kelsoe as well as other affiliated entities, the ruling noted. The suits allege that the asset management company mismanaged and misrepresented the nature of the RMK funds, failed to properly value the assets within the funds and more. Many of the suits have been consolidated in the federal court for Western District of Tennessee.

The shareholders in this case have also filed arbitration claims against Morgan Keegan & Co., with FINRA. In addition, the Securities and Exchange Commission and state regulators in Alabama, Mississippi, and South Carolina have all begun administrative proceedings against Morgan Asset Management, Morgan Keegan and Kelsoe, the ruling stated.

The RMK funds have been the focus of many investor complaints. Back in March, a FINRA arbitration panel awarded $2.5 million to one investor, Andrew M. Stein. The panel found Morgan Keegan liable for unsuitability, negligence and failure to supervise.

In another defeat a few days later, an 89-year-old, highly decorated World War II veteran won an arbitration award of $1.1 million. In that case, the FINRA panel found that Morgan Keegan misrepresented and failed to disclose the true nature of the RMK funds to companies owned by General Henry Cobb Jr.

At the time, Morgan Keegan said in an email: “As of March 1, 2010, 81 cases have been heard by arbitration panels with 39 resulting in an outright dismissal of the claims. Overall in the 81 cases tried, claimants have sought approximately $49 million in compensatory damages and have received overly $10.3 million in awards. Additionally, 118 cases seeking more then $25 million in damages have been abandoned by claimants.”

Related arbitrations lost by Morgan Keegan over the funds include high-profile personalities such as former Chicago Bulls player Horace Grant, who was awarded $1.4 million and former major league baseball player and sportscaster Tim McCarver, who was awarded $100,000.

The management of seven RMK Select fixed income funds were transferred to Hyperion Brookfield Asset Management in July 2008, the firm said. The three open-end funds were closed and the four closed-end funds have been renamed. Kelsoe, the former portfolio manager of the bond funds is employed by Morgan Keegan but no longer manages any funds, the firm said.