Citing the need for fairness and accuracy in broker-dealer communications, FINRA recently identified specific information that must be included in discussions of the U.S. Treasury Department guarantee program for money market funds (the "Program"). (See FINRA Notice to Members 08-58.) While FINRA does not require communications about money market funds to discuss the Program, any reference to the Program must include the following information:
- The Program provides a guarantee to participating money market mutual fund shareholders based on the number of shares invested in the fund at the close of business on September 19, 2008.
- Any increase in the number of shares an investor holds after the close of business on September 19, 2008 will not be guaranteed.
- If a customer closes his/her account with a fund or broker-dealer, any future investment in the fund will not be guaranteed.
- If the number of shares an investor holds fluctuates over the period, the investor will be covered for either the number of shares held as of the close of business on September 19, 2008, or the current amount, whichever is less.
- The Program expires on December 18, 2008 unless extended by the Treasury Department.
FINRA also notes that a customer who transfers an account containing money market shares guaranteed under the Program from a carrying firm to a receiving firm may lose the guarantee. Because of recordkeeping limitations in the ACATS (Automated Customer Account Transfer Service) process, it may be impossible for the receiving firm to identify those transferring shares that were owned on September 19, 2008, and consequently to identify the scope of coverage under the Program. FINRA expects the receiving firm to inform the customer of the potential loss of coverage before the account is transferred.
In a related development, the Treasury Department published an FAQ press release on the Program. In addition to discussing the disclosure items mentioned by FINRA, the Treasury Department noted that a customer who transfers money market shares from one ownership structure to another after September 19, 2008 loses the guarantee. Thus, an employee benefit plan participant who terminates employment and transfers money market shares to an individual retirement account would lose the guarantee.