Reply #25: Here is comes...

[Buttercup McToots]

Money market fund breaks the buck!

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Here is comes...

http://www.marketwatch.com/news/stor...%7D&dist=msr_1


Quote:
NEW YORK (MarketWatch) -- One of the first and largest money market funds has put a seven-day freeze on investor redemptions after the net asset value of its shares fell below $1, in a rare instance in the fund industry of what is called "breaking the buck."
Primary Fund (RFIXX: ) , a $64 billion fund managed by money market fund inventor The Reserve, said late Tuesday that its $785 million holding of Lehman Brothers Holdings debt has been valued at zero.

As of 4 p.m., the value of the fund's share was 97 cents. The Reserve said that redemption requests received before 3 p.m. will be paid out at $1 a share.

While Primary Fund's Lehman holding was small compared to the fund's overall size, the fact that it froze redemptions reflects a surge in redemption requests by investors.

"Effective today and until further notice, the proceeds of redemptions from The Primary Fund will not be transmitted to the redeeming investor for a period of up to seven calendar days after the redemption," The Reserve said in a statement. Officials at the company declined to comment further.

Money market funds pride themselves on their liquidity and the safety of their investments. All money market shares are priced at $1 -- a figure so important to the industry that fund companies take losses to keep the share price from dipping below $1, which is known as breaking the buck.

"They didn't just break the buck, they shattered it," said Don Phillips, managing director at investment research firm Morningstar Inc. (MORN: 59.28, -0.78, -1.3%) .