SEC Rejects Prime Money Funds for 15c3-3 Special Brokerage Reserves. Law firm Dechert LLP recently filed a supplement letter to the SEC on behalf of client Federated Investors on changes to Rule 15c3-3 and 15c3-1 under the Securities Exchange Act of 1934. Federated and others had requested that the SEC consider "prime" AAA-rated money funds for special reserve accounts for brokerage firms in addition to Treasury money funds, which the SEC had initially proposed in recent changes to Broker-Dealer Responsibility Rules. Federated now is pushing for Government money funds to be considered, evidently since it appears unlikely that prime funds will be okayed. "[W]e recognize that during this period of stress in the sub-prime debt markets, the Commission may be reluctant to move forward on our AAA-rated money market fund proposal" says the Jan. 7 letter. Federated CEO Chris Donahue said recently, "The SEC determined that prime money market funds would not be included in potential changes to the rule" and that Federated "is proceeding with efforts to enable the use of government & agency money funds."

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