The Reserve fund announced last night that it was paying out 50% on investor accounts, with whatever balance remains when they can liquidate the rest of their assets. This makes sense; the terms on their assets are short, and it's probably better for everyone to hold to maturity than to dump on the market at fire sale prices.
The question remains: why didn't they say so? The fund has handled its communications with investors and the press abominably, as Evan Cooper points out. People who use the money for short term purposes should, at the very least, be informed when they might get their cash to pay off the loans they've had to take out. And it certainly doesn't do the firm any good to have the press repeatedly print, as it has, "the company was unavailable for comment". When uncertainty is feeding a raging liquidity crisis, you don't add to it by conducting all your investor and press relations through your website.
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When uncertainty is feeding a raging liquidity crisis, you don't add to it by conducting all your investor and press relations through your website.
Indeed, you should instead be granting interviews to journalists like Evan Cooper (who has spoken with you many times over the years and who sees you often on the commuter train) so that they can add their own editorializing, selective quoting, and misinterpretation to your communication efforts. After all, how else are they going to increase their pageviews and ad revenue? There's a liquidity crisis going on here, and journalists have children to feed too!
What's wrong with posting everything you have to say to your website, where everyone who wants to know what you have to say can read it for themselves, in your own words, in their entirety?
Communication from The Reserve have indeed been abominable, but I think Evan Cooper is fantasizing, as only a journalist could, if he believes that better communication might benefit The Reserve in some way. The company is out of business. Every fund the company holds is being liquidated. No one will ever again invest with a company called The Reserve. No one will ever again invest with Bruce Bent. This is not a field where you get a lot of chances.
Reserve still has a working FDIC insured sweep program, and was expanding into a couple other areas (something dumb like debit card access to your 401k, as I recall from a Forbes article a while back). My guess is they're saying as little as possible as advised by counsel, so maybe they can survive the lawsuit tsunami and sell what's left in a year or two.
This is an interesting piece that I would say cuts to the chase as far as the blame game goes...
http://www.minyanville.com/articles/WMT-HD-YUM-bbi-GDP-SHLD/index/a/19789