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Reserve's money fund 'breaks the buck'
The world's first money-market fund's $62B in assets fall below a safety benchmark due to soured investments in Lehman.
Last Updated: September 17, 2008: 2:55 PM EDT
BOSTON (AP) -- The assets of a money-market fund that held $62 billion three months ago have fallen below a safety benchmark intended to ensure investors who put money in can get it all back - just the second unsettling instance in which a fund has exposed investors to potential losses in the nearly four-decade history of money-market funds.
Reserve Management Co.'s announcement that its Reserve Primary Fund had "broken the buck" after its assets fell sharply because of soured investments in Lehman Brothers Holdings Inc. marked the first such investor exposure to money-market losses since 1994.
New York-based Reserve said the value of $785 million in debt securities issued by Lehman and held by the Primary Fund were written down to zero as of Tuesday afternoon - a consequence of Lehman's collapse and bankruptcy after the federal government failed to bail out the investment bank over the weekend.
Money-market funds normally maintain assets of at least $1 for every dollar invested in funds, and are supposed to return interest to investors in the form of dividends.
Money funds not backed by FDIC [more]
http://money.cnn.com/2008/09/17/pf/b...ion=2008091714
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