Illiquid market conditions are preventing it from returning the funds $10 billion in assets to investors, the company said. Although Reserve said the value of the underlying assets of the funds shares was $1 as of Tuesday, Reserve did not promise those investors can expect full repayment of shares.
We cant imagine the government not backing these securities, which is another way of saying we expect to recover the full amount when they mature, Bruce Bent, Reserve vice chairman and president, told investors in an online notice. The funds short-term securities are simply illiquid, he said.
As markets conditions improve, the company said in a separate statement, the fund will restore liquidity to investors. We will liquidate assets as soon as we can, but we dont think it is in our shareholders interests to sell at fire-sale prices."
Except for the Primary Funds $785 million exposure to
Beginning Oct. 2, Reserve began posting the holdings of all of its funds holdings as of the close of business the previous day, along with the holdings maturity schedule. As of that date, for instance, the U.S. Government Fund held $1.65 trillion of debt in
As to the charge that Reserve tipped off some investors on Monday, Sept. 15 that the Primary Fund had broken the buck, the firm vehemently denied the allegations.
The notion that the Reserve would secretly tip investors with material nonpublic information and create a run on the Reserve Primary Fund is absurd, the company said. The funds portfolio holdings were available to any investor who asked, including the people who have sued us. Shareholders in the fund should be outraged that these lawsuits are causing the fund to waste valuable time and effort in litigation at a time when all efforts should be focused on getting money back to investors. When the dust settles, we are confident that the insider trading allegations will be dismissed.