WASHINGTON (AP) — Eight former mutual fund directors are facing civil charges after they allowed others at the firm to set values for mortgage securities and investors lost roughly $1.5 billion on five funds.

The Securities and Exchange Commission said Monday the directors of Morgan Keegan & Co. delegated the duty to fund managers, even though directors are required by law to set values when market prices are not available.

The directors failed to make a diligent effort to learn how the values were determined, the SEC said.

Last year, Morgan Keegan, based in Memphis, Tenn., agreed to pay $200 million to settle the SEC's fraud charges that it inflated the investments' value as the housing market was collapsing in 2007.

The former directors, through their attorneys, disputed the SEC's allegations and said they will contest them in court.

They are: J. Kenneth Alderman, Jack R. Blair, Albert C. Johnson, James Stillman R. McFadden, Allen B. Morgan Jr., W. Randall Pittman, Mary S. Stone and Archie W. Willis III.

The attorneys for Blair, Johnson, McFadden, Pittman, Stone and Willis, said in a statement that their clients "emphatically deny" the allegations.

"They intend to contest this case vigorously and they are confident that they will ultimately be vindicated," said the statement from attorneys Jeffrey Maletta and Stephen Crimmins.

Alderman and Morgan "will vigorously defend themselves against these misguided and unfounded charges," their attorneys, Peter Anderson and Deborah Heilizer, said in a statement.