my money is in Reserve UST only.
I doubt anyone would have read my post about the assets in Prime Reserve back in March and come to the conclusion that the way that fund was being mishandled would eventually prompt people to make a run on a Treasury MMF, just because they are run by the same management company but this is exactly what happened. In bank runs rational thinking goes out the window and safe stores of money are hit indiscriminately along with the bad.
My husband's IRA is at a brokerage that used Reserve for their sweeps as well. He had a few dollars left in Reserve Treasury MMF and that's how I ended up late one night reading through their AR. I figured reading it would help me sleep but it had the opposite effect once I reviewed the assets in there.
Yesterday we received a letter from the brokerage saying that they had made a blanket request from Reserve to withdraw all assets from all Reserve funds.
Here's an excerpt:
FBW has cancelled all "sweeps" and purchases into any Reserve fund for its clients. Yesterday (Sept 19), we submitted a redemption order for all remaining assets in all Reserve money market funds. As a result, you will notice a zero balance in your Reserve Fund money market fund investment position, and you will see an increase in your "cash" balance in the amount of the redemption. Please be aware that the increase in the cash position will not be funded until we receive cash from Reserve for the redemption and further, the valuation of that position is uncertain until Reserve Fund confirms its Net Asset Value. The Reserve Fund has stated that it may take up to 7 days to transmit the cash from redemptions, but it is not guaranteeing delivery of the cash within that timeframe. Until we receive cash from Reserve Fund, FBW cannot release that cash to you. Likewise, FBW cannot accept securities purchase orders that would require cash from Reserve Fund as a means of funding the purchase.
Although Reserve previously stated that it would honor checks and other similar payment requests such as bill pay and ATM withdrawals, and other prearranged automatic debit transfers on a same day basis, up to $10,000 per account, it has not confirmed whether it has honored the checks and other similar payment requests that were presented within the past few days. There is no assurance that the Reserve Fund has or will do so. Reserve may stop processing all checks and other similar payment requests. To protect against this risk, effectively immediately, you should stop writing checks against your Reserve Fund assets, no longer make ATM withdrawals, and cancel all scheduled automatic payments from Reserve Fund.
<end of excerpt>
I have a friend who co-manages (he does 60 days or less-his partner does 61-90 days) an institutional MMF and he has described his job as "so boring that no one could possibly be interested in it". Clearly it has gotten a little too interesting in the past six months. Based on his description of duties, I would imagine that it'll take 60-90 days for the fund to be completely liquidated. |
