SEC mulls enforcement action against Reserve

Staff at the SEC’s Division of Enforcement has informed Reserve Management Co. Inc. that it intends to recommend that the Securities and Exchange Commission bring an enforcement action against the company for violating federal securities laws. The staff also told the New York-based company, which serves as the investment adviser to the Reserve family of funds, that it intends to recommend enforcement actions against Bruce Bent, president of the management company and president and chairman of each Reserve fund and his sons; Bruce Bent II, senior vice president of the management company and co-CEO of each fund; and Arthur Bent III, chief operating officer and treasurer of RMCI and co-chief executive officer of each fund. The announcement of the SEC's intent, which the company received on Dec. 18 and posted on its website last night, added that the three Bents "expect to defend vigorously against the allegations." In September, the Reserve's flagship money market fund, The Reserve Primary Fund of New York, "broke the buck." Its net asset value fell from $1 to 97 cents per share, where it currently stands. The fund, as well as the other Reserve funds, are currently are in the process of being liquidated. Aside from its web postings, the company has not responded directly to press inquiries since the crisis began.