Crane Data Subscribers
"Break The Buck" Rumors False, No Money Mkt Funds Trading Below $1. Rumors circulated this morning that a money market mutual fund had broken the buck, or dropped below its $1.00 share price. These rumors are false. No money fund has declined in value, to our knowledge, and none are expected to. The dangers from SIV-related debt have been diluted by time and asset inflows, and the handful of defaults and downgrades have been met by bailouts or cash infusions by investment managers. This time rumors, allegedly based on comments by Miller Tabak and spread by HSBC Securities, among others, had centered around Citi, failed auctions and SIV support actions, which the grapevine mistakenly morphed into a possible issue with Citi money market funds. Legg Mason, which runs the Citi funds, said to Bloomberg, "None of the Legg Mason money-market funds have broken the buck at all." Again, rumors of a money fund breaking the buck are incorrect and were based on false information, likely circulated with malicious intent. Money funds experienced a number of similar false rumors during the ABCP Crisis of 2007. At least six separate incidents of losses or redemption freezes at enhanced cash private placement "3c-7" funds, boutique investment advisors, and local government pools all were erroneously called money market or cash funds over the past six months by reporters and market participants.
