On Saturday, US Securities and Exchange Commission denied that it had rejected a proposed settlement with fund managers of a large money market fund during the 2008 financial crisis. The SEC also said their negotiations never reached any amount for for consideration.
SEC lawyer Nancy Brown said in a brief filed that lawyers for defendant including Reserve Management Co. made a "misstatement". This was after they claimed that they had reached a settlement in principle with the US regulator only to learn on September 5 that SEC subsequently rejected it.
John Dellaportas, a lawyer for the defendants claimed that the SEC rejected a settlement with the fund managers. Dellaportas complained regarding the commission's "sudden refusal to settle". He said last September 5 that the said refusal had harmed fund shareholders with additional delay costs.
The case was from events occurred on September 16, 2008 when Reserve Primary Fund's net asset value of USD62 billion plunged below USD1 per share piece that it was designed to maintain.
Reserve Primary held USD785 million of debt from Lehman Brothers Holdings Inc. which went bankrupt September 15, 2008. Reserve Primary worried about the Lehman stake that was flooded with redemption requests that were unable to be complied by the fund.
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