Shareholders filed a lawsuit in U.S. District Court in Manhattan Thursday against
The lawsuit faulted the fund for deviating from its stated objective to preserve capital and liquidity but, instead, to pursue higher yields.
This strategy was exemplified by the funds disastrous and unreasonable concentration of $785 million face value in commercial paper issued by
In the past 37 years, Reserve founder and money market fund pioneer Bruce Bent always touted that his funds would never hold commercial paper, noted Connie Bugbee, managing editor at
A spokeswoman for Reserve declined to comment on the lawsuit, the future of the fund and the firm.