Reserve Fund makes initial $26 bln distribution
NEW YORK, Oct 30 (Reuters) - Reserve Primary Fund REPXX.O, which is being sued by investors after its net asset value dropped below $1 a share in the financial crisis, said on Thursday it made its initial distribution of $26 billion to Primary Fund shareholders.
The well-known money market fund said it had mailed checks to some shareholders and would make payments by wire to all other shareholders on Friday.
Reserve said in a statement the distribution represented approximately 50 percent of the total assets of the fund as of Sept. 15, and it said about $25 billion in total assets remain in the fund.
Investors have filed a series of lawsuits against New York-based Reserve in federal and state courts seeking damages for shareholders who had not redeemed their shares as of Sept. 16 when the fund halted redemptions.
The net asset values, or NAVs, of money-market funds are never supposed to fall below $1 a share -- an event known as "breaking the buck."
Reserve's NAV dropped to 97 cents on Sept. 16 because of its losses on debt issued by Lehman Brothers Holdings Inc (LEHMQ.PK), which filed for bankruptcy protection on Sept. 15.
Reserve Chairman Bruce Bent is known as the "father" of money funds after creating the first money market mutual fund in 1970 with a partner.
The fund had about $65 billion in assets as of Aug. 31, including $785 million in short-term notes from Lehman Brothers.
The fund's problems reverberated with investors. In the government financial rescue package, regulators included an insurance program for money funds, which are an important source of short-term credit for business. (Reporting by Nicole Maestri; Editing by Anshuman Daga)
