MutualFundWire.com
The insiders' edge for 40 Act industry executives!
an InvestmentWires' Publication
an InvestmentWires' Publication
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MutualFundWire.com
The insiders' edge for 40 Act industry executives!
an InvestmentWires' Publication |
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Wednesday, August 19, 2009 Reserve Moves to Get SEC Case Tossed Reserve Management Company is making an effort to get the fraud suit filed against it by the SEC thrown out of court. Last week the fund firm filed a motion to dismiss with the United States District Court for the Southern District of New York (SEC v. Reserve Management Company, Inc., et al.; No. 09-CV-4346). For the full story on the the death of the Reserve and its Primary Fund, see MFWire's timeline. The motion was filed on behalf of Reserve Management Company, Inc., Resrv Partners, Inc., Bruce Bent Sr., and Bruce Bent II. Company officials stated that Reserve Management Company, Inc. and the other defendants are "cooperating fully with the SEC's staff regarding this matter, but, at the same time, are vigorously defending themselves in this action." While Reserve continues to battle in court, it has also rebranded its ongoing operations under the name Double Rock (see MFWire: "Bent Raises a New Rock Out of Reserve's Ashes"). The motion to dismiss lays out at least part of Reserve's defense that it took no improper action in the hours following the demise of Lehman Brothers just more than a year ago. With the landscape changing minute by minute, Defendants sought the advice and involvement of lawyers, accountants, Board members, regulators—including the Fed and the SEC itself—and spoke with investment bankers and competitors as they sought to save the Fund. As the Complaint acknowledges, Defendants disclosed all of the facts that were allegedly omitted by the very next morning. During these 24 hours, Defendants did not seek to (and did not) profit from their actions but, rather, sought to save the Fund and protect the Fund’s investors. And it was the Lehman bankruptcy—not any of Defendants’ actions or statements—that caused the Fund to break the buck. Reserve's lawyers continue in the motion by arguing that the SEC has failed to show intent on the part of the fund firm's management to commit fraud. They add that the "defendants' motive to save the Fund and protect investors' investment is the type of "generalized" motive, common to most corporate officials..." and that the SEC case ignores Reserve managements having sought guidance from numerous individuals and regulators (including the SEC itself) during the 24 hours that Lehman was failing. Printed from: MFWire.com/story.asp?s=22387 Copyright 2009, InvestmentWires, Inc. All Rights Reserved |