Reserve Primary Fund owner Bruce Bent and its fund's management agreed on a settlement with their shareholders for USD 54.5 million. It was nearly five years ago when the USD 62 billion fund collapsed after Lehman Brothers Holdings Inc filed for bankruptcy. The settlement was revealed in a filing made to the US District Court in Manhattan.
Investors filed a class action lawsuit against Reserve Primary Fund in 2008 when the latter disclosed that its net asset value had dropped to below USD 1 per share. The net asset value of money market mutual funds needed to be maintained at USD 1 per share. Reserve Primary Fund, however, experienced losses of over USD 785 million in investments when Lehman went bankrupt.
The class action lawsuit was led by investors of the Third Avenue Institutional International Value Fund. John Browne, an attorney who represented the investors, told Reuters, "We are very pleased to have reached this hard-fought settlement, which is an excellent result for investors."
As part of the deal, Bent and the other defendants of the case would pay the investors USD 10 million in cash. They would also have to give up USD 42 million of the USD 72 million in claims they had insisted for indemnification and management fees.
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