ignites: Federated Sues SEC on Fees
Mutual fund publication ignites writes, "Federated Sues SEC Over Money Fund Liquidity Fee Rule." The article tells us, "Federated Hermes is suing the Securities and Exchange Commission over its liquidity fee rule for institutional money market funds. The firm contested a key provision of the regulator's 2023 money market fund reforms, escalating its previous efforts to roll back a rule that has already drawn scrutiny from the industry, a complaint filed Friday shows. The asset manager is seeking to vacate the SEC's mandatory liquidity fee, which requires institutional prime and municipal money market funds to charge investors during periods of elevated redemptions, according to the suit filed in Pennsylvania district court. The mandatory liquidity fee, which was added to Rule 2a-7 in July 2023, requires 'a burdensome and costly regulatory framework and which was in our view adopted without adequate notice and opportunity to comment, and without an adequate cost benefit analysis,' a Federated spokesperson said." The ignites piece says, "Federated is represented by Jan Folena, partner at Stradley Ronon. She declined to comment. Federated consolidated its own prime fund lineup over that period and now offers a single institutional prime fund, the roughly $15 billion Federated Hermes Institutional Prime Obligations Fund, according to Crane Data. The rule has weighed heavily on the category, even though funds have not actually had to impose fees, said Pete Crane, president of Crane Data." They quote Crane, "`"While it might be seen as closing the barn door after the horses are all gone, if this longshot succeeds there might be a lot more horses trying to get back in <b:>`_.... No money fund has implemented a liquidity fee, but the mechanics and threat of one weigh heavily on prime institutional money funds, so many have decided just to exit the space."
