Federated Investors Inc., the third-largest manager of U.S. money-market mutual funds, is planning legal action to block rule changes being contemplated by the U.S. Securities and Exchange Commission that the company said could destroy the $2.7 trillion cash-management industry.

Federated will contest the proposed rule change by both regulatory and legal means, Christopher Donahue, chief executive officer of Pittsburgh-based Federated, said Friday in a conference call with analysts.

Money-fund providers and regulators have been wrestling for three years over how to make the funds safer without destroying the appeal of the investment product, which is used by corporations and millions of households. The SEC is expected to make two proposals before the end of March.