Client Alert

SEC Takes Action on Money Market Fund Reform

March 11, 2010

The Investment Management Practice

The Securities and Exchange Commission (SEC) has completed its first step toward money market fund reform by adopting new rules and amendments to existing rules, including Rule 2a-7, under the Investment Company Act of 1940, as amended (the 1940 Act) (the Money Market Fund Reform Rules). The SECs action is intended to make money market funds more resilient to certain short-term market risks, and provide greater protections for investors in funds that become unable to maintain a stable net asset value per share. The Money Market Fund Reform Rules, among other things, tighten the maturity and credit quality standards for money market funds, and impose new liquidity requirements. The Money Market Fund Reform Rules become effective May 5, 2010. Unless otherwise discussed below or in the Release (defined in fn. 1), the compliance date is May 5, 2010. The SEC has published a marked version of Rule 2a-7 reflecting the amendments on its website.

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