Adviser seeks Reserve refunds from New York AG

A Brooklyn financial adviser has filed a complaint with the New York State Office of the Attorney General on behalf of clients who haven’t received the final distribution from the liquidation of a money market mutual fund offered by Reserve Management Co. Inc. Delores Monte, president of DM Financial Services Inc. of New York, said that about 75 of her clients had invested nearly $3 million in the Reserve Primary Fund. The fund was closed after its net asset value fell below a dollar on Sept. 16. The Reserve of New York announced the fund’s liquidation plan Dec. 3. Since that time, clients have received two distributions, according to Ms. Monte. “So far, shareholders have only gotten 85% back,” she said. “[The Reserve] cannot even tell us when we’re getting the rest of the money,” Ms. Monte said. “I have people who use these funds to pay real estate taxes and other bills.” Ms. Monte said that she has contacted The Reserve and hasn’t received any information about further distributions. “We also called the SEC, and they said they are checking into it,” she said. Since the Primary Fund broke the buck, The Reserve has been on the receiving end of a flurry of lawsuits: 27 individual and class actions had been filed as of Feb. 20, according to the firm. Ms. Monte also expressed concern about a reserve fund set up for legal costs being incurred by the fund. According to The Reserve, interim distributions will be made to shareholders “up to the amount of a special reserve. The special reserve will be used to satisfy anticipated costs and expenses of the fund, including legal and accounting fees,” the firm said in a Feb. 26 statement on its website. The Reserve also announced that it had set aside $3.5 billion in the special reserve. “As soon as the litigation is resolved, the sooner monies held in the special reserve can be released to shareholders and potentially the greater the payout,” the statement read. “The plan is being implemented subject to the supervision of the Securities and Exchange Commission.” The SEC could not confirm that they are looking into Ms. Monte’s specific complaint. “We do not comment on correspondence from private parties,” said spokesman John Heine. “We cannot confirm or deny any kind of investigatory activity,” he added. Calls to the attorney general’s Investor Protection and Securities Bureau and the and The Reserve were not returned at press time.