Manager of buck-breaking money fund liquidates 15 more

BOSTON -- The firm managing a money-market mutual fund that "broke the buck" last month said Thursday it is shutting down 15 more of its funds, with no promises when investors can expect money back, or how much.

Reserve Management Corp. said fund trustees voted to liquidate the assets of the 14 funds, including Reserve's $1 billion Yield Plus Fund, and 14 smaller Reserve money-market funds that invest mostly in local government debt.

The New York-based firm said it was in talks with the Securities and Exchange Commission to permit the funds to take longer than the usual seven days to return money after investors place withdrawal orders.

Reserve said it "cannot currently estimate when distributions to investors will be made," but is "acting as expeditiously as markets permit."

To return investor cash, managers must sell their funds' assets and wait for short-term debt to mature — processes that are complicated by volatile markets, and investors' reluctance to buy securities carrying even the smallest risk.

"The funds will liquidate assets as soon as they can, but the funds do not believe that is in our shareholders' interests to sell at fire-sale prices," Reserve said.

Meanwhile, many investors are left without access to cash they parked in the funds, thinking they could easily get it back if needed.

Michael Volko, a 40-year-old insurance salesman from Doylestown, Pennsylvania, was one of the lucky ones. He said he had $296,000 in Reserve's Pennsylvania Municipal Money-Market Fund, placed there through TD Ameritrade, which parks any idled cash in customers' brokerage accounts in money-market funds so the cash earns interest.

Volko's orders to withdraw the money were frozen for a couple weeks until he managed to get the cash back this week. But other investors still in the fund don't know when to expect their cash back, now that the fund is being liquidated.

"There are a lot of people stuck in these funds who have no idea yet they are even frozen out," Volko said.