The SEC has fined three independent fund directors for their alleged conduct in supervising a money market fund whose net asset value (NAV) dropped below $1.00 per share in 1994.

The SEC said in a complaint filed Jan. 11 that the three independent directors and one affiliated director of the Community Bankers Mutual Fund of Boston knew that the fund's US Government Money Market portfolio had roughly 27 percent of its assets in derivatives which were losing value in the spring of 1994. Nevertheless, the SEC said the directors improperly allowed the fund's NAV to remain at $1.00 per share through September, when the fund went out of business. Shareholders ultimately lost approximately $2.5 million, according to the SEC complaint.

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