The number of angry investors who have lost money recently in one or more of a group of Regions Morgan Keegan mutual funds – and who are itching for a legal battle because of it – is growing.

A new lawsuit has been filed in federal court in Memphis on behalf of two investors in a pair of the funds, the values of which have plummeted since the beginning of 2007 because of their exposure to subprime mortgage-related assets.

Elizabeth Willis and Sam Pearson of Shelby County filed suit in U.S. District Court for the Western District of Tennessee on Dec. 21. Their suit names as defendants Morgan Keegan & Co., its Memphis-based asset management arm, Regions Financial Corp., various bank directors and fund managers.

Morgan Keegan’s Memphis-based arm, Morgan Asset Management, oversees the funds in question.

Willis invested roughly $36,600 in the RMK Select Intermediate Bond Fund between March 2005 and November 2007, according to the lawsuit. Pearson invested almost $13,000 in the RMK Select Intermediate Bond fund and about $16,300 in the RMK Multi-Sector High Income Fund between August 2004 and October 2007.

To get an idea of their investment loss, the three funds have seen a decline in value year-to-date of between 50 percent and 60 percent, according to Chicago-based investment research firm Morningstar Inc.

One of the claims made in the suit is that the managers of the RMK funds – some of the losses of which are the lowest in their investment category this year – did not fully convey to investors the nature of the risk associated with the funds.

“As late as the summer of 2007, as the housing and credit crisis deepened, (the funds) continued to play down and conceal the funds’ growing exposure to the problems in the subprime market,” the suit claims.

Meanwhile, lawyers from at least four firms across the U.S. are working together to investigate the management and performance of several of the RMK funds and are expected to file as many as a dozen complaints in the near future on behalf of investors.

Last month, an Indiana charity filed an arbitration claim with the Financial Industry Regulatory Authority against one of the funds. Another federal lawsuit was filed earlier this month in Memphis by two investors in the RMK funds.

For more details on the earlier complaints, see our Dec. 17 edition at www.memphisdailynews.com.