JPMorgan, Goldman Sachs, Bank of New York Mellon, Charles Schwab Disclose Market-Based NAVs of Money Market Mutual Funds

While regulators continue pondering whether to impose more regulations on money market mutual funds, a number of financial institutions, including Goldman Sachs Group Inc. (GS), JPMorgan Chase & Co. (JPM), Fidelity Investments, BlackRock Inc. (BLK), Bank of New York Mellon Corp. (BK), Federated Investors Inc. (FII), and Charles Schwab Corp.,(SCHW), started disclosing the market-based net asset values of these funds last month. Reasons given for these disclosures included offering greater transparency and giving investors more information about the market. However, some believe there are firms are issuing these disclosures because that is what their competitors are doing.

Currently, money market funds have a $1/share stable net asset value for all investor transactions. The underlying assets of the funds, which are debt securities with high ratings, however, can undergo periodic, small value changes that may slightly affect a fund’s per share market value. This is also called the shadow price, which are reasonable estimates/fair valuations of the price that an instrument could be sold at in a current trade.

A few years ago, the Securities and Exchange Commission approved modifications to its Rule 2a-7 and other rules about money market funds mandating that managers of the funds reveal changes to portfolio holdings and give the regulator the market-based net asset values of the funds. Fund information for each month has to be given to the SEC at a succeeding month. The Commission then makes the information available to the public 60 days after the month to which the data pertains has concluded. These Daily disclosures would make the data more immediate (and relevant) for investors.

Late last year after then-SEC chairman Mary Schapiro failed to convince most of her fellow commissioners to accept the Commission’s rule proposals, the Financial Stability Oversight Council put out proposed recommendations to modify MMF’s regulatory treatment while insisting that fund reforms are key to protecting financial stability. FSOC then went on to seek public comment on three options: allowing part of investors’ redemption requests to be delayed, letting fund NAVS float freely, and other measures, such as tighter qualifications for investment diversification and greater minimum liquidity levels.

Now, the SEC is also developing its own proposal. Should the Commission put out its own rule, the FSOC is unlikely to issue one also.

Having experienced legal representation increases an investor’s chance not just of recouping losses but also more, if not all of their lost investment than if he/she were to go it alone. Shepherd Smith Edwards and Kantas, LTD, LLP is a securities fraud law firm that represents investors throughout the US. If you believe that you were the victim of money market fund fraud, contact our stockbroker fraud lawyers to ask for your free case evaluation.

Firms Disclose Money Market Fund Values As FSOC, SEC Consider Additional Regulation, Bloomberg/BNA, February 1, 2013

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