On June 5, 2013, the Securities and Exchange Commission (“SEC”) voted to release its long-awaited proposals to make significant revisions to the rules governing money market mutual funds (“money funds”), as well as to adopt related new disclosure requirements. The SEC stated that the proposed amendments seek to reduce what the SEC perceives to be money funds’ vulnerability to heavy redemptions, attributing much of the redemption activity during periods of “financial stress” to “prime money market funds” (funds that invest mainly in taxable short-term obligations of corporations and banks, repurchase agreements, and asset-backed commercial paper) rather then government, U.S. Treasury, and tax-exempt/municipal money funds.

Summary of the SEC’s Proposals -

The SEC has proposed two alternative sets of proposals. One option would require money funds, with certain important exceptions, to sell and redeem shares using a “floating” NAV, that is, at a share price based on a model-based value of the funds’ portfolio securities (the “Floating NAV” proposal). [2] The other option would permit all money funds to continue to sell and redeem shares at a stable NAV, but would require funds to impose liquidity fees if the level of weekly liquid assets falls below a specified threshold, and would permit money fund boards to suspend redemptions under those circumstances, that is, to “gate” the funds (the “Fees & Gates” proposal). The SEC noted that it is considering adopting some combination of the Floating NAV and Fees & Gates proposals. The SEC is seeking comment on all aspects of the two proposals.

Please see full alert below for more information.

LOADING PDF: If there are any problems, click here to download the file.

Written by:

Published In:


DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

© K&L Gates LLP | Attorney Advertising

Don't miss a thing! Build a custom news brief:

Read fresh new writing on compliance, cybersecurity, Dodd-Frank, whistleblowers, social media, hiring & firing, patent reform, the NLRB, Obamacare, the SEC…

…or whatever matters the most to you. Follow authors, firms, and topics on JD Supra.

Create your news brief now - it's free and easy »

All the intelligence you need, in one easy email:

Great! Your first step to building an email digest of JD Supra authors and topics. Log in with LinkedIn so we can start sending your digest...

Sign up for your custom alerts now, using LinkedIn ›

* With LinkedIn, you don't need to create a separate login to manage your free JD Supra account, and we can make suggestions based on your needs and interests. We will not post anything on LinkedIn in your name.