Reuters: Regulatory News: Three SEC officials oppose money fund reform report

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Three SEC officials oppose money fund reform report May 11th 2012, 21:48 Fri May 11, 2012 5:48pm EDT * IOSCO report explores money fund reforms * SEC's Schapiro also wants new rules for money funds * 3 SEC officials say IOSCO report should be scrapped * Commissioners: report does not reflect their views By Sarah N. Lynch WASHINGTON, May 11 (Reuters) - Three of the five top members of the U.S. Securities and Exchange Commission on Friday came out in opposition to an international report exploring reforms for the money market fund industry. Democratic SEC Commissioner Luis Aguilar and Republican SEC commissioners Troy Paredes and Dan Gallagher issued a joint statement, saying the report did not reflect the views of the majority of the commission. SEC Chairman Mary Schapiro has said further steps are needed to help prevent another run on money market funds by panicked investors, like the one that occurred in 2008 during the financial crisis. The fund industry has strongly resisted the push, and three of the SEC commissioners have expressed doubts that more reforms are needed. They point to a series of new rules adopted in 2010 that tightened credit quality standards, shortened the maturities of fund investments and imposed a new liquidity requirement, among other things. On April 27, the International Organization of Securities Commissions, or IOSCO, issued a report titled "Money Market Fund Systemic Risk Analysis and Reform Options." In the report, IOSCO analyzes the risks of money market funds and seeks comments about various potential regulatory options to help bolster the industry, including a controversial move to a floating net asset value. IOSCO's membership is comprised of representatives from securities regulatory agencies around the world, including the SEC. "We feel that it is important to state for the record that the Consultation Report does not reflect the views and input of a majority of the Commission," said Aguilar, Paredes and Gallagher. "In fact, a majority of the Commission expressed its unequivocal view that the commission's representatives should oppose publication of the Consultation Report and that the commission's representatives should urge IOSCO to withdraw it for further consideration and revision." The statement by the three commissioners came on the same day that fund industry executives convened in Washington for an annual conference by the Investment Company Institute, the industry's leading trade group. Schapiro used the event to reiterate her case for more reforms. "I have very legitimate concerns about the risks that are posed by the stable NAV and the potential to cause runs," Schapiro told the audience on Friday morning. "We all know what happened in 2008." Schapiro is urging the agency to consider two potential plans. One would consist of both a capital buffer requirement and a 30-day hold-back on redemption requests by investors. The other would impose a floating net asset value to help curb investor complacency over the stable $1-per-share value that funds currently quote. In order to issue a proposal, Schapiro will need to win three votes on the five-member panel, Link this Share this Digg this Email Reprints

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