More Announcements From The Reserve
The Reserve issued a couple more updates on the status of the frozen Primary and Government funds. The Primary Fund release says delays in payment were caused because, "The Reserve had to adjust its computer systems due to a decline of the net asset value of the fund's shares below $1.00.... In doing so, they've identified a number of transactions that have raised issues, most of which have been resolved between The Reserve and its custodian, State Street Bank & Trust Company." The Government Fund release says, "As you know, the U.S. Government Fund did not hold Lehman Brothers debt in its portfolio and has maintained a $1.00 Net Asset Value. Nevertheless, it experienced very heavy redemptions over a short period of time amid an almost illiquid market. That being said, we have concluded that it is in the best interest of all shareholders to liquidate the Fund and return your cash and accumulated interest as quickly as possible without undertaking any fire sales. In order to make periodic cash distributions, we are modifying existing functionality in our software. Our broker-dealer clients, who are linked with our systems, must also make modifications and adjustments to protect the interests of their accounts." See also, CNN Money's "Warning: Extra yield - extra risk" and Bloomberg's "BNY Mellon's Profit Falls 53% on Money Fund Bailouts".
