Reuters: US Dollar Report: Hope for Bents' Reserve Fund to avoid U.S. trial-lawyer

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Hope for Bents' Reserve Fund to avoid U.S. trial-lawyer Sep 12th 2012, 23:30 Wed Sep 12, 2012 7:30pm EDT * Bents, SEC have not had settlement talks - SEC lawyer * Jury could hear Bents testify at October trial By Grant McCool NEW YORK, Sept 12 (Reuters) - Money market pioneer Bruce Bent and his son, charged with misleading investors just after the collapse of Lehman Brothers, have a slim hope to resolve a U.S. market regulator's lawsuit before it goes to trial in October, the Bents' lawyer said on Wednesday. But a lawyer for the U.S. Securities and Exchange Commission told the judge at a pre-trial hearing that the two sides had not recently held settlement discussions. Bent, 75, credited with inventing the world's first money fund, and his son Bruce Bent II, have been accused by the SEC of fraudulently dissuading investors from redeeming shares in their Reserve Fund on Sept. 15 and 16, 2008 -- hours after Lehman had gone bankrupt, and saying the fund was safe. Reserve, the first money-market fund in the United States when it started in 1970, once had $62 billion invested and held $785 million in Lehman debt. Its collapse was a driver of the credit market seizure following Lehman's bankruptcy. New regulations have since reduced the credit and maturity risks that money funds may take. At a pre-trial hearing on Wednesday, U.S. District Judge Paul Gardephe of Manhattan asked SEC lawyer Nancy Brown if the parties had recently had settlement discussions. "No, Your Honor," Brown replied. Later in the hearing, the Bents' lawyer indicated that the trial scheduled to begin on Oct. 1, might still be avoided. The lawyer, John Dellaportas, told the judge "it's still our hope" the two sides "could reach settlement between now and the trial." Dellaportas said much could depend on decisions the judge has yet to make on pre-trial motions. Gardephe, who at one point said he had "really been disturbed by the lack of communication" between the lawyers, scheduled the next hearing for Sept. 25. If the 2009 lawsuit does go to trial, the Bents will be called to testify to a jury about how their conservative fund "broke the buck," or fell below $1 per share on Sept. 16, 2008. By January 2010, Reserve said it had distributed nearly all of the $50.5 billion left in its Reserve Primary fund after Lehman's bankruptcy. Investors recovered about 99 cents on the dollar. In March, the judge denied the Bents' requests to end the SEC's case. He also rejected the regulator's demand for a finding of liability. The case is SEC v. Reserve Management Co et al, U.S. District Court, Southern District of New York, No. 09-04346 Link this Share this Digg this Email Reprints

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