In money market mutual fund news, the trial of the father of money funds began yesterday, InvestmentNews
says its "time to brace for new money fund rules," and an international body offered its take on the money fund reform fight.
For the full story on the lawsuit so far and the death of the Primary Fund, see MFWire's timeline.
Enter Day One of the Trial of the Bents
More than four years after their $62.5-billion flagship Reserve Primary Fund
] broke the buck after the collapse of Lehman Brothers, Bruce Bent Sr.
and Bruce Bent II
were in court yesterday in New York City in the U.S. District Court for the Southern District of New York as their lawyer and one for the SEC
presented opening arguments. The thrust of the SEC's case is the claim that the Bents tried to save Reserve but not the fund's investors, even as they reassured those investors.
"The evidence shows, it was a lie, plain and simple," the SEC's lead attorney, Nancy Brown
, told the jury.
and the Wall Street Journal
all covered day one of the trial.
Brown presented the SEC's opening arguments, and John Dellaportas
countered with an opening argument for the Bents. The WSJ
expects up to 95 witnesses to testify, with Bruce Bent Sr. himself slated for tomorrow. U.S. District Judge Paul Gardephe
estimated that the trial will take three weeks.
The IOSCO Speaks
Also yesterday, the International Organization of Securities Commissions (IOSCO
a report on money funds [full report
]. The report endorses numerous ideas that are unpopular with the money fund industry, like floating NAVs, redemption restrictions and capital requirements. Yet the IOSCO noted that its recommendations were opposed by a majority of the SEC commissioners, and ICI
chief Paul Schott Stevens
attacked the IOSCO for supporting "flawed regulatory proposals."
, the Business Standard
, Global Custodian
all covered the IOSCO's report.
Prepare Your Clients
On Sunday the editors of InvestmentNews
argued that when U.S. Treasury Secretary Tim Geithner asked
the Financial Stability Oversight Council (FSOC
) he leads to step into the money fund reform fight, "changes became almost inevitable."
"Now is the time for advisers to being to prepare their clients for the coming changes," the trade pub wrote. "At the very least, clients may have to accept a floating NAV."
Neil Anderson, Managing Editor
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