Saturday, December 6, 2008

Reserve Primary Fund Threat Ices Shareholder Claims

You remember the Reserve Fund, it broke the buck last month, and everyone sued. Now it has told its shareholders, take 98.5 cents on the dollar (the broken buck price) or we will defend ourselves, using your money - the assets in the fund.

Yup, the trustees of the fund entered into an agreement with the fund manager to pay legal expenses, so the shareholders' own money will be used to defend the shareholders' suit.

The provision is actually not at all unusual. Its application is bizzare.
Post a Comment