U.S. District Court Judge Paul Gardephe ordered Reserve Funds to repay the remaining $3.5 billion remaining in the Primary Fund, minus the $83.5 million the company is setting aside for legal expenses, to investors. The money will be paid on a pro rata basis.

On Sept. 16, the $64 billion money market fund was exposed to $785 million in losses due to its holdings in Lehman Brothers debt, rendered worthless upon its bankruptcy the day before. While the value of the fund’s assets fell to 97 cents on the dollar as a result, investors are expected to get back 99 cents, according to calculations by the Securities and Exchange Commission, which provided the distribution plan to the court.

SEC Chairman Mary Schapiro applauded the judge’s decision, saying, “We are pleased with the court’s order.”

The judge also decided that the investors who received the full amount of their shares just ahead of the announcement of the Lehman bankruptcy at 8 a.m. Sept. 15 would not be obliged to pay back any money under a “claw back” clause.



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