A jury on Monday found that the father and son team that once managed a high-profile money market mutual fund did not commit fraud as their Reserve Primary Fund “broke the buck” in 2008.
The managers, Bruce Bent Sr. and Bruce Bent II, were charged with misleading investors in a civil case filed by the Securities and Exchange Commission. The two were accused of lying to their investors that efforts would be taken to avoid “breaking the buck,” or falling below the $1-a-share price required by money market funds.
In September 2008, shortly after the investment bank Lehman Brothers collapsed, the $62 billion Reserve Primary Fund, which held a substantial amount of Lehman debt, fell below the $1-a-share price, a virtually unprecedented event in the staid world of money market funds.
Fears that other money market funds would also “break the buck” forced the government to agree to backstop the industry.
The Bents denied the charges. In court testimony the men described efforts they took to shore up the fund’s reserves.
Bent II was found negligent by the jury.
Bent Sr. is known as the father of the money market mutual fund, founding the Reserve Primary Fund in 1970 as a safe investment vehicle.