Bruce R. Bent II, president of the failed $62.5 billion Reserve Primary money-market fund, was found negligent by a jury on one claim of violating a securities law while his father was absolved of all claims in a lawsuit by the U.S. Securities and Exchange Commission.
The federal panel of six women and one man in Manhattan yesterday cleared both Bents on claims they defrauded investors and the younger Bent on six of seven claims brought by regulators. His father, Bruce R. Bent, was cleared on all four claims against him, including that he “knowingly and recklessly violated” U.S. securities law and “aided and abetted” the company and corporate entities in violating them.
John Dellaportas, a lawyer for the Bents and the company, told jurors in his closing statements that his clients didn’t lie or defraud investors. He blamed the Lehman bankruptcy and an unprecedented freeze in the credit markets for Reserve’s failure. The Bents believed they would be able to raise money to maintain the $1 NAV and pay investors’ redemption requests, he said.
“There was a lot slipping through the cracks,” Strock said. “Yes it was Bruce Bent II’s responsibility but the staff was making mistakes and he was making mistakes, so it was compounded. That’s the reason why we came to negligence, they all should have been more careful.”
Bent, 75, is credited with inventing the retail money-market mutual fund and was known for criticizing rivals for taking excessive risk. He has said the best money funds should be “boring.”