The Wall Street Journal reported that the fund promised to redeem $20 billion to investors in the fund as of September 15. As part of a liquidation of Reserve Primary, this move would reimburse investors for 30% to 40% of their original investments, the Journal said. The reason the outlay is $20 billion, a Reserve spokeswoman said, is that this sum is what is “currently available at the fund at this time.”
The partial distribution is expected to occur around October 13, and will be made pro rata in proportion to the number of shares each investor held as of the close of business September 15.
According to the news report, the fund’s troubles started when the Reserve Primary Fund, flagship of Reserve Management Corp., announced September 16 that its $1 net asset value had fallen three cents. No money fund had “broken the buck” since 1994, and the news set off a firestorm.
The fund got massive redemption requests September 15 and 16, and received an exemption from the Securities and Exchange Commission to suspend payments.