Although money market funds are required to only hold short-term paper with “minimal credit risks,” a number of large funds have exposure to subprime loans through offshore structured investment vehicles (SIVs), Fortune reports.

SIVs work by issuing short-term loans and taking the money and putting it into long-term debt expected to pay higher interest rates.

The funds thought they were safe in making these investments as the credit ratings agencies had highly rated these SIVs, but that, in fact, turns out to be in error, since so many held subprime paper. One money market fund at Bank of America, for instance, had $640 million invested in a SIV that just folded, and filings indicate that other fund companies with SIV exposure include Fidelity, JPMorgan and Federated.

At issue here is whether the fund managers and their compliance teams did their job properly by investing in SIVs with such exposure. Surely, they wouldn’t have done so if they examined the SIVs for credit risks. As Fortune puts it, “Fund management companies should have looked beyond the rating and basically asked themselves: Does a SIV really have the same creditworthiness as U.S. Treasurys, also rated AAA?”

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