The Securities and Exchange Commission agreed Wednesday to settle a bubble-era subprime fraud suit against broker Morgan Keegan. And in an unusual twist, it managed to wring a stiff settlement out of the guy who oversaw the alleged fund-overpricing scheme.

Morgan Keegan will pay $200 million to settle charges it defrauded customers by selling mutual fund shares at inflated net asset values. James Kelsoe, the manager of the funds whose customers were misled, agreed to pay $500,000 and to be barred from the securities industry. He won’t be missed.

The Helios funds overseen by Kelsoe were stuffed full of subprime-related securities whose value plunged during the 2007-2008 credit bust, the SEC says. But Kelsoe continued to act as if the securities retained their value, publicizing inflated net asset values that made it look like the funds holding those souring bonds weren’t suffering declines.

“The falsification of fund values misrepresented critical information exactly when investors needed it most – when the subprime mortgage meltdown was impacting the funds,” said Robert Khuzami, director of the SEC’s Division of Enforcement. “Such misconduct does grievous harm to investors.”

Neither he nor Morgan Keegan, needless to say, admitted any guilt. But the penalties in this case speak for themselves – particularly the one against Kelsoe, given the agency’s failure to hold high-ranking individuals accountable in the recent subprime suits against Goldman Sachs (GS) and JPMorgan Chase (JPM). This is a very different kind of case, sure. But maybe there is hope for our bedraggled watchdogs yet.