The SEC has sued a former money market fund portfolio manager for fraud, saying he misled investors about the value of derivatives he purchased for the funds.

Michael P. Traba, who managed two money market funds for The First National Bank of Chicago, ordered the fund administrator to set prices for derivatives based on a valuation method which Traba knew or should have known would provide inflated valuations, the SEC alleged in an administrative complaint filed Dec. 10. The funds, the Cash Management Fund and the MM Series Fund, would have had a net asset value of below $1.00 per share on at least eight occasions in 1994 had the derivatives been properly valued, the SEC alleged.

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