Calling Third Avenue Management’s rare step of freezing withdrawals from a $788 million credit mutual fund on Wednesday “unprecedented,” the Massachusetts Securities Division on Monday said it was investigating the closure of the firm’s Focused Credit Fund and its subsequent liquidation plan that includes blocking further investor redemptions.

Third Avenue Management specializes in risky bonds, and its Focused Credit Fund was heavily concentrated in junk bonds, subordinated debt and unrated securities of distressed companies. The regulator sent out a subpoena to Third Avenue Monday.

The Third Avenue Focused Credit Fund, which has seen its net asset value plunge recently from approximately $3 billion to $789 million, is the biggest retail fund to shut its doors since the 2008 crash, raising fears of a rout in the riskier parts of the bond market, notes the state’s top securities regulator, William Galvin.

“Investors have been seeking yield in the current low interest rate environment, and junk bond funds have offered an alternative, but average investors do not expect to be cut off from trading in an open-end investment company registered under the ‘40 Act,” Galvin said in a statement. “My office is opening this investigation to determine when and how this decision was made and to determine the extent of Massachusetts investors who have been impacted by this unprecedented decision on the part of fund management.”

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