Legal right to redeem MM funds

This Is The Government: Your Legal Right To Redeem Your Money Market Account Has Been Denied

Yet new regulations proposed by the administration, and specifically by the ever-incompetent Securities and Exchange Commission, seek to pull one of these three core pillars from the foundation of the entire money market industry, by changing the primary assumptions of the key Money Market Rule 2a-7. A key proposal in the overhaul of money market regulation suggests that money market fund managers will have the option to "suspend redemptions to allow for the orderly liquidation of fund assets."

Conclusion

At this point it is without doubt that even the government understands that when things turn sour, and they will, the run on the bank will be unavoidable: their solution - prevent money from being dispensed, when that moment comes.

What we will know, is that now i) the government is all too aware that the market has become one huge ponzi, and that all investment vehicles, even the safest ones, are subject to bank runs, and ii) that said bank runs, will occur. It is only a matter of time. And just as the president told everyone directly to buy the market on March 3, so the SEC, the Group of 30, and Barney Frank are telling us all, much less directly, to get the hell out of Dodge.

http://www.zerohedge...rce=patrick.net

Not to imply any contrary feeling, but hasn't this always been the case based upon prospectus? I have ALWAYS presumed money market funds could and could become illiquid if they were invested in the wrong things. I thought most prospectuses allowed the suspension of redemptions if such would jeapardize the majority of shareholders (or somesuch). That's why I only hold Govt. Money Market funds.

I've always thought it was in the prospectus, too. I've also thought that there can be some pretty funky stuff in even US gov't money market funds, like agency paper and derivatives. Presume "gov't" means "US gov't". I wouldn't touch a Cali state money market fund with tweezers.

I should know this...but embarrasingly I don't. Mark do you happen to know what IB does with your funds when they're not invested?? should probably dig into this ey?

What they are actually doing is feeding the fulfillment of "the run on the bank" whichever form it takes. I don't know about all of you but if I had money market money , I would cash it before the crowd and move it to Switzerland or Canada. At least you can control that, you can't control IRA and 401K accounts, you are at ther mercy on that one. GS.

what u want is a (short term) US Treasury account, altho now that the govt is guaranteeing all FNM FRE paper u may be better off with those higher yields - it took a lot of haggling to get it at my broker. I did this because most MM funds only say they will ATTEPMT to keep the $1 par value of your funds, and yes they usually have a clause about right to inflict an orderly liquidation - while you wait. I just was informed that a lot of swiss banks no longer want US resident clients, because of th US govts actions, and have started charging very large fees - solution is a canada bank, which is very easy, try CIBC, or if u have a residence outside the US, you will still be able to have a low fee Swiss account. I think u may as well have some gold and silver coins if you are truly worried.

what u want is a (short term) US Treasury account, altho now that the govt is guaranteeing all FNM FRE paper u may be better off with those higher yields - it took a lot of haggling to get it at my broker. I did this because most MM funds only say they will ATTEPMT to keep the $1 par value of your funds, and yes they usually have a clause about right to inflict an orderly liquidation - while you wait.

I just was informed that a lot of swiss banks no longer want US resident clients, because of th US govts actions, and have started charging very large fees - solution is a canada bank, which is very easy, try CIBC, or if u have a residence outside the US, you will still be able to have a low fee Swiss account. I think u may as well have some gold and silver coins if you are truly worried.

Canada is definitely the better choice, we gots lots of water and oil too.....!

GS

I should know this...but embarrasingly I don't. Mark do you happen to know what IB does with your funds when they're not invested?? should probably dig into this ey?

i discussed this with ib back in sept of 08 and they assured me my non invested funds were in cold hard cash...and assured me i was losing money everday by holding us dollars.....and i was satisfied

haha...good one atlas - thx for the info. I believe I'll do a followup with them as well next week just for an add'l check - thanks