Reuters writes "SEC may press suit over Reserve money fund failure". It says, "A Manhattan federal judge on Wednesday refused to dismiss a U.S. Securities and Exchange Commission lawsuit accusing Reserve Management Co and co-founder Bruce Bent Sr of fraud over the largest ever collapse of a U.S. money market mutual fund.... In his 28-page ruling, Gardephe said the SEC sufficiently alleged that the defendants had motive and opportunity to commit fraud, citing their 'significant holdings' and their 'enormous reputational stake' in the fund. The judge also said the regulator sufficiently alleged the defendants made misstatements or omissions concerning the rate of redemptions, the net asset value, and the availability of a credit agreement to support the $1 net asset value." But "Gardephe declined to let the SEC use some statements on how to value Lehman paper to support its fraud claims, in part because of the 'chaos and uncertainty' after the bankruptcy. Bruce Bent Sr. has said the bankruptcy 'created an unforeseeable and out-of-control condition for many parties.'" See the Memorandum Opinion and Order for "Securities & Exchange Commission v. Reserve Management Company, Inc.".
