Tags: reserve | fund | ameriprise

Suit: Reserve Fund Tipped Big Investors

By    |   Thursday, 23 Oct 2008 11:55 AM

A federal judge in Minneapolis is mulling a motion that seeks release of audio tapes of calls made by the sales staff at the Reserve Fund to customers on Sept. 15, the day before the money market fund's share price dropped below a dollar.

A motion filed by Ameriprise Financial Services alleges that the Reserve Fund tipped off some large investors so that they could redeem their shares at full value.

According to the lawsuit, filed on Sept. 19, two Reserve Fund executives said during a conference call with Ameriprise executives on Sept. 18 that some big investors had received an early warning about the pending crisis.

The fund executives, moreover, "seemed surprised that Ameriprise had not also been tipped at the same time," the complaint said.

Lawyers have deposed the two executives and obtained records and audio tapes of phone calls made by three of the fund's five sales agents, according to Harvey J. Wolkoff of Ropes & Gray in Boston, representing Ameriprise.

The Reserve Fund denied the accusations. In a recent notice to its investors, management called the accusation "absurd" and said shareholders "should be outraged" that the lawsuit had been filed.

When the Primary Fund opened for business on Sept. 15, its $62 billion in assets included $785 million in short-term notes from Lehman Brothers, which had filed for bankruptcy that morning.

Though that stake was a tiny fraction of its portfolio, the fund was hit with a flood of redemption demands.

Ameriprise customers had more than $3.3 billion in the Primary Fund when it fell below a dollar a share.

© 2017 Newsmax. All rights reserved.

   
1Like our page
2Share
StreetTalk
A federal judge in Minneapolis is mulling a motion that seeks release of audio tapes of calls made by the sales staff at the Reserve Fund to customers on Sept. 15, the day before the money market fund's share price dropped below a dollar.A motion filed by Ameriprise...
reserve,fund,ameriprise
264
2008-55-23
Thursday, 23 Oct 2008 11:55 AM
Newsmax Inc.
 

Newsmax, Moneynews, Newsmax Health, and Independent. American. are registered trademarks of Newsmax Media, Inc. Newsmax TV, and Newsmax World are trademarks of Newsmax Media, Inc.

NEWSMAX.COM
MONEYNEWS.COM
© Newsmax Media, Inc.
All Rights Reserved