5.19.2009 Driven by the Treasury Secretary’s directive to “strengthen the money fund industry,” the SEC has promised to review the money fund model and is considering a variable or floating net asset value (NAV) rather than the current $1 NAV. The SEC wants to prevent a run on the market similar to what happened in September 2008, where NAVs fell below $1 and losses in money funds posted at $468 billion in a week. The SEC unveiled its proposal at a panel discussion organized by the U.S. Chamber of Commerce. The industry was not open to the proposal and opined that a floating NAV could be too sensitive to losses and gains, might not prevent a run on the market, and would eliminate money market funds as being a cash equivalent, among other problems.
Click http://www.investmentnews.com/apps/pbcs.dll/article?AID=/20090531/REG/305319974 to access a recent article regarding the rule proposal.