The U.S. Securities and Exchange Commission has lost its bid for substantial penalties or a new trial against executives of the Reserve Primary Fund, the now-defunct $62 billion money market fund that “broke the buck” in 2008. Southern Districk Judge Paul Gardephe (See Profile) denied the SEC’s requests on Monday, mostly siding with lawyers for RPF and its executives at Morgan, Lewis & Bockius.
The Reserve Primary Fund, the oldest money market fund in the country, held $785 million in commercial paper from Lehman Brothers when Lehman declared bankruptcy in September 2008. RPF couldn’t absorb the hit, and on Sept. 16, 2008, the net value of the fund’s assets fell below $1 a share. In May 2009 the SEC sued RPF and its managers—investment pioneer Bruce Bent Sr. and his son Bruce Bent II—accusing them of making false statements to investors in the two days following Lehman’s collapse in hopes of propping up their sagging fund.
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