Archive for the “Ameriprise, Primary Fund” Category

In what’s become a juggling act on the part of the government to reinvigorate the frozen state of the credit markets, the Federal Reserve will now provide $540 billion in financing to help money-market mutual funds swamped by investor redemptions.

Following the collapse of Lehman Brothers in September, along with other major financial upsets, nervous investors have withdrawn some $500 billion from money-market funds. On Sept. 16, one of the first and biggest money-market funds - the $63 billion Reserve Primary Fund - broke the buck after the net asset value of its shares fell below $1.

The Fed’s latest move to shore up money-market funds - a $3.3 trillion industry - entails an initiative called the “Money Market Investor Funding Facility” which, as its name implies, will provide liquidity to money-market fund investors. As part of the program, JP Morgan Chase will run five special facilities, with the Federal Reserve Bank of New York lending the facilities 90% of the purchase price of the assets that they buy. Among the assets eligible for purchase are certificates of deposit and commercial paper issued by highly rated financial institutions that has 90 days or less remaining until the mat urity date is reached.

The Federal Reserve says the Money Market Investor Funding Facility will remain in place until at least April 30.

Meanwhile, in a Bloomberg Television interview, Jim Bianco, president of Bianco Research LLC, called the government’s effort to back securities purchases from money-market funds a sign “that policy makers are trying to prevent Great Depression II.”

Our affiliation of securities lawyers is actively involved in advising individual and institutional investors in evaluating their legal options when confronted with subprime and other mortgage-related investment losses.

The plot continues to thicken in the legal saga involving Ameriprise Financial Services and a money-market fund that broke the buck recently. Ameriprise, which is suing Reserve Management Company’s Primary Fund, wants a federal judge to hand over audio tapes that reportedly contain conversations of sales reps alerting large institutional investors in the fund to redeem their shares at full value before it was too late.

If the allegations are true, the selective disclosure would have financially devastated thousands of Ameriprise investors. As reported Oct. 21, 2008, in the New York Times, Ameriprise and its clients had more than $3.3 billion in the Primary Fund when it “broke the buck” on Sept. 16 by falling below a dollar a share. Two smaller funds broke the buck, as well.

The Primary Fund is calling the selective disclosure charge by Ameriprise “outrageous.”

Our affiliation of securities lawyers is actively involved in advising individual and in stitutional investors in evaluating their legal options when confronted with subprime and other mortgage-related investment losses.