Reserve Primary Fund
Encyclopedia
The Reserve Primary Fund was a large money market mutual fund
.
On September 16, 2008, during the Global financial crisis of September-October, 2008, it lowered its share price below $1 ("breaking the buck") because of exposure to Lehman Brothers
debt securities. This resulted in demands from investors to return their funds as the financial crisis mounted. Normally, the net asset value
of money market funds is kept at $1.
The Reserve had multiple other funds frozen because of this failure. They have liquidated a few funds, and post periodic updates about plans to liquidate other funds on their website.
As of October 27, 2009, more than $3.5 billion sat in the Primary fund, most in a special reserve held aside to be used for costs and expenses, including legal fees.
In November 2009, a U.S. district judge ordered the fund to make pro-rata distribution of almost all remaining assets to shareholders. As of July 2011, shareholders had recovered 99.04% of their investments.
Money fund
A money market fund is an open-ended mutual fund that invests in short-term debt securities such as US Treasury bills and commercial paper. Money market funds are widely regarded as being as safe as bank deposits yet providing a higher yield...
.
On September 16, 2008, during the Global financial crisis of September-October, 2008, it lowered its share price below $1 ("breaking the buck") because of exposure to Lehman Brothers
Lehman Brothers
Lehman Brothers Holdings Inc. was a global financial services firm. Before declaring bankruptcy in 2008, Lehman was the fourth largest investment bank in the USA , doing business in investment banking, equity and fixed-income sales and trading Lehman Brothers Holdings Inc. (former NYSE ticker...
debt securities. This resulted in demands from investors to return their funds as the financial crisis mounted. Normally, the net asset value
Net asset value
Net asset value is a term used to describe the value of an entity's assets less the value of its liabilities. The term is most commonly used in relation to open-ended or mutual funds because shares of such funds registered with the U.S. Securities and Exchange Commission are redeemed at their net...
of money market funds is kept at $1.
The Reserve had multiple other funds frozen because of this failure. They have liquidated a few funds, and post periodic updates about plans to liquidate other funds on their website.
As of October 27, 2009, more than $3.5 billion sat in the Primary fund, most in a special reserve held aside to be used for costs and expenses, including legal fees.
In November 2009, a U.S. district judge ordered the fund to make pro-rata distribution of almost all remaining assets to shareholders. As of July 2011, shareholders had recovered 99.04% of their investments.