Financial professional groups have teamed with consumer and investor groups to ask the U.S. Securities and Exchange Commission to help monitor money market funds.
The SEC should require money market funds to file nonpublic portfolio descriptions each month, so that the SEC can monitor the funds’ risk of loss of principal, according to representatives for 6 groups.
The individuals who signed the letter include Daniel Barry, government relations director for the Financial Planning Association, Denver, and Ellen Turf, chief executive of the National Association of Personal Financial Advisors, Arlington Heights, Ill.
The other signers are Mercer Bullard of Fund Democracy, Oxford, Miss.; Barbara Roper of the Consumer Federation of America, Washington; Ken McEldowney of Consumer Action, San Francisco; and Daniel Pedrotty of the AFL-CIO, Washington.
Many money market funds hold the types of mortgage-backed structured investment vehicles that have run into problems lately, and some fund managers have repurchased money market fund shares to prevent loss of principal, or the risk of “breaking a dollar,” the signers write.
“We question the prudence of continuing to rely so heavily on fund managers’ willingness to bail out money market funds when loss of principal is a threat,” the signers write.
In some cases, fund managers’ urge to bail out money market funds may conflict with the responsibility of the managers to protect the solvency of banks, bank affiliates or other government-regulated financial institutions, the signers write.
A copy of the letter asking the SEC for a money market portfolio filing rule is available