UNENVIABLE: Morgan Keegan & Co. finds itself in the spotlight lately for a group of RMK funds that foundered during '07's subprime fallout, with various claims saying investors lost a lot more than they bargained for. -- Daily News File Photo

The Memphis brokerage firm that oversees a group of struggling mutual funds has settled an arbitration claim filed against one of them. The RMK funds saw much of their value wiped out in 2007's credit crisis.

Terms of the settlement between Morgan Keegan & Co. and the Indiana Children's Wish Fund - which grants wishes to children with terminal illnesses - include a payment by the firm to the charity. That payment, the amount of which remains private, was made a little more than a week ago.

The Indiana charity, which lost almost $50,000 investing in the Regions Morgan Keegan Select Intermediate Bond Fund, was one of the first investors in the group of bloodied RMK funds to file a claim or lawsuit recently saying the funds' volatility had not been fully disclosed.

Morgan Keegan spokeswoman Kathy Ridley could not be reached for comment.

Other investors in the various RMK funds followed soon after the Indiana charity. Two separate lawsuits were filed in U.S. District Court for the Western District of Tennessee in December alone, both making claims similar to the charity's.

For its part, Morgan Keegan denied the notion it glossed over risks associated with the charity's investment in an October letter sent to the group's executive director. That letter also included an offer to settle the claim for a little less than $15,000.

The 23-year-old wish-granting charity turned that offer down but now has agreed to a new deal.

"I'm informed that the parties have agreed to settlement terms including confidentiality," said Ryan Bakhtiari, a partner at the Aidikoff, Uhl & Bakhtiari law firm in Beverly Hills, Calif.

A loose affiliation of lawyers from across the country, including Bakhtiari, is currently investigating the performance and management of the six RMK funds whose values plummeted this year partly as a result of the mortgage market meltdown. More suits and investor claims are expected to be filed soon.

By way of highlighting the effect of the RMK losses for investors on an individual level, Bakhtiari said the nearly $50,000 loss the Indiana charity took from its mutual fund investment could have funded about 10 wishes of children the group serves.