MMF Independent Trustees in Crisis: MMF Executives Sue Independent Trustees for Fraud and Waste of Corporate Assets

In a bizarre twist to the case of the money market fund that broke the buck, the investment adviser to the Reserve Primary Fund (Reserve Fund) and its principals sued the fund’s independent trustees, laying the blame for the fund’s spectacular 2008 collapse squarely at their feet.

In court papers filed on January 22, 2013 responding to a class action complaint against them, the principals, as third party plaintiffs, charged that the independent trustees had a “substantial, if not controlling, role in almost all the conduct with which [the plaintiff] takes issue.” If they are found liable in the class action, the principals state, then the independent trustees should indemnify the principals to the extent the independent trustees themselves are responsible for the conduct.

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