An arbitration panel has struck down an investor's $1 million-plus claim against Morgan Keegan's troubled bond funds, citing the standard industry warning "Past performance is not guarantee of future results."

The decision was handed down by a Financial Industry Regulatory Authority panel in late July. The arbitration dispute resolution documents, made public this week, unveil the details of what went into the decision that involved Morgan Keegan's RMK bond funds that have sparked a spate of litigation and one investor who had personal ties to his broker.  

"We are pleased with the results," Terry Weiss, an Atlanta-based attorney at Greenberg Traurig LLP, representing Morgan Keegan in the case, said in a statement.  "The reasoned award shows that the claimants were unable to meet their burden of proof. The panel agreed with us that the claimants were responsible for their investment decisions, and that their losses were caused by a broader market collapse and not by any wrongdoing of Morgan Keegan."

The investor, Robert L. Calvert, first filed an arbitration claim in January 2011 on behalf of several firms for which he was the main shareholder in charge of investment decisions. Those firms include C&H Properties Inc., Calvert-Spradling Engineers Inc. and Robert L. Calvert Consulting Inc.

Together, those claimants requested more than $1 million in damages, $55,000 in costs, plus unspecified punitive damages, rescissionary damages, interest, costs and attorneys' fees. Their causes of action in the claim included breach of fiduciary duty, negligence, negligent supervision, fraud, breach of contract and violation of securities laws in Mississippi and Tennessee. Morgan Keegan investments named in the claim include the RMK Select High Income Fund, RMK Select Intermediate Bond Fund, RMK Strategic Income Fund, RMK Advantage Income Fund and RMK Multi-Sector High Income Fund.

Morgan Keegan denied the allegations, tried to get the claim dismissed and requested $359,170 in attorneys' fees and $16,674 in expenses at the end of the hearing.

In the end, the FINRA arbitration panel sided with Morgan Keegan, following an extensive evaluation of the investors' decisions and Calvert's relationship with his broker, who the documents describe as "a relatively young man whose father knew RLC through shared National Guard service."

Calvert began investing in the funds from 2002, arbitration documents show. And while those funds were highly rated by Morningstar for years, they took a dive with the markets in 2007. The result was that the claimants' investments lost all of their value by late 2008, resulting in what they claim was more than $2 million in losses.

But Calvert, who had investments in Cadence Bank that similarly went awry, continued to hold the investments, even after he cashed out $200,000 from his Morgan Keegan investments, and did not read prospectuses carefully, according to case documents.

"He (Calvert) made no effort to revoke the purchases, as he would have been entitled to do," the decision in the FINRA dispute resolution states. "He claimed he relied on the recommendations of [his broker], but discussions were short telephone calls or rare personal meetings and not focused on the possible risk of the types of assets the funds intended to - and did - hold."

The FINRA arbitration panel ruled that the claimants did not prove that Morgan Keegan directly misled them, and denied request for punitive damages and legal expenses.  

An attorney representing the claimants, Jeffrey Erez at Fort Lauderdale, Fla.-based law firm Sonn & Erez PLC, was not available for comment. Erez said in an interview with On Wall Street last year that the claims against Morgan Keegan for the funds are so strong, that plaintiffs should win most cases.