As the lawsuits pertaining to last week’s Financial Meltdown pour in, Ameriprise Financial is suing the Reserve Fund for allegedly telling some of its other major investors ahead of time that its money market funds were about to be worth less than a dollar a share, allowing them to withdraw their money.
NY Times: By the time the Reserve Fund reported last Tuesday afternoon that its Primary Fund money market funds had “broken the buck” — that is, were no longer worth a dollar a share — investors had already withdrawn billions of dollars from the fund.
Some market analysts assumed they had reacted to the panic sweeping the market. But a lawsuit filed in Minneapolis late last week by Ameriprise Financial offers another explanation: The suit claims the Reserve Fund tipped some big customers about its crisis in advance so that they could get their cash out before its losses became public.
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