Will the Reserve Fund tapes hold any scandalous surprises?

Jim Kim — Mon, 20 Oct 2008 20:41:14 -0400

The saga of the reserve fund has certainly been ugly. It was one of the relatively few money funds that actually broke the buck, which ignited a near-panic in the industry in September. It certainly was pivotal in forcing the Fed to announce a money fund protection program. But in the inevitable litigation that has broken out, some scandalous charges have emerged; notably that fund officials tipped off some big customers ahead of the announcement that it had suffered the massive losses, reports the New York Times. The charges are that they wanted to let preferred customers redeem at full value. Plaintiffs now are asking a judge to release audio tapes of phone calls from employees to customers the day before the big news broke. If the allegations are true, it would be very scandalous--yet another black eye for the industry.

For more:
- here's the article

Money funds and the credit crunch--whew!

Fri, 09 May 2008 06:59:55 -0400

There were a few scenarios out there that were really, really nasty. It's one thing when accredited investors take their lumps on hedge funds. But what if Ma and Pa started taking losses on their money market funds? Many money funds, which most people equate with cash, invested in SIVs. The fear not too long ago was that many would get burned; it hasn't really panned out, fortunately. More than a few banks have bailed out their funds. The mentality, rightly, was "anything to prevent breaking the buck." The political fallout would have been immense, but disaster was averted. The top consumer financial firms--the Vanguards and Fidelitys of the universe--will step in to prevent real customer account damage.

For more:
- here's a Fortune article

Money Funds

Will the Reserve Fund tapes hold any scandalous surprises?

Money funds and the credit crunch--whew!