Jackson Free Press

Mississippi is once again locking horns with the federal government, but this time it's about neither guns nor affordable health-care insurance—it's about securities fraud.

Mississippi Secretary of State Delbert Hosemann—whose office has purview over regulation of stocks and bonds in the state—said the U.S. Securities and Exchange Commission is dragging its feet on dispersing millions of dollars owed to defrauded Mississippi investors.

In June 2011, the SEC accused James Kelsoe Jr., a bond portfolio manager for Memphis-based Morgan Keegan, of lying about the value of subprime mortgage-backed securities in a fund he oversaw. Morgan Keegan settled with investors for $200 million even though the total losses topped $1 billion, including $71 million from about 2,000 people in Mississippi.

Under the settlement, half would be distributed immediately to investors, including $6 million going to Mississippians. The other half went into an account the SEC manages, called the Fair Fund.

Three people from Mississippi filed a lawsuit in March to compel the SEC to start distributing from the fund. Hosemann recently filed a brief in support of the plaintiffs.

"Injured Mississippi investors have been stopped from receiving their own money by their own government. What we have is yet another example of the federal government not following its own laws at the expense of hard-working Mississippians," Hosemann said.

One such person is Betty Kilgore, an 83-year-old Bolton resident who lives with her daughter and two grandsons.

"It's rather expensive, and it hurts me to think that I have money that I cannot get," Kilgore, who continues working in sales, said during a press conference at Hosemann's Capitol office Wednesday. "I have tried and tried and tried. I've talked to everyone. I'm still without money. I would appreciate the help."

Hosemann said when SEC officials "rebuffed" his repeated requests for a timeline on when the agency would begin distributing the cash people are owed, he contacted all four Mississippi members of the U.S. House of Representatives. Attorney General Jim Hood's office also attempted to contact the SEC. None of Mississippi's officials received a response, Hosemann said.

Don Barrett, attorney for the plaintiffs in the federal lawsuit against the SEC, called the situation "a perfect example of dysfunctional government."

"It's outrageous for people to have to go to court to get their own money back," Barrett said.

Documents on the agency's website show the SEC has requested until Aug. 23 to develop the distribution plan.