Reserve Fund Lied About Lehman Losses: SEC

SEC lawyer tells jury that failed money-market fund misled shareholders.

Reserve Primary Fund, the failed $62.5 billion money-market fund, misled shareholders about the safety of its fund after it lost money on Lehman Brothers Holdings Inc. debt, a government lawyer told a jury.

Reserve, which held $785 million in Lehman debt, caused a run on money-market funds after its net asset value fell below $1 a share on Sept. 16, 2008, the day after Lehman filed the biggest bankruptcy in history. The failure of Reserve, the first money fund in 14 years to “break the buck,” contributed to the global financial crisis.

‘Reasonable Care’

“We are going to tell you nobody committed any fraud here and people executed their jobs with reasonable care,” Dellaportas said.

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