The Securities and Exchange Commission announced yesterday that it has filed civil fraud charges against several entities and individuals who operate the Reserve Primary Fund, including its founder Bruce Bent and his son Bruce Bent II, “for failing to provide key material facts to investors and trustees about the fund’s vulnerability after as Lehman Brothers Holdings, Inc. sought bankruptcy protection.” The SEC also is also seeking pro rata distribution of all remaining fund assets, which would release approximately $3.5 billion currently being withheld from investors pending the outcome of numerous lawsuits against the fund, the trustees and other officers and directors of the Reserve entities. The Reserve Primary Fund became the first money market mutual fund in over a decade to “break the buck” after its exposure to Lehman Brothers caused its net-asset value to drop.
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