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Update on Money Market Guarantees

Author: Lona L. Feldman Date: 10/10/2008

Categories: Corporate and Business Law, Estate Planning and Administration

The U.S. Treasury Department’s Temporary Guarantee Program for Money Market Funds guarantees a $1.00 share price of participating money market fund, if those shares were held on close of business September 19, 2008. The guarantee is triggered if a participating fund liquidates its assets as a result of its net asset value falling below $.995 per share price.

Coverage is provided to shareholders for amounts that they held in participating money market funds as of the close of business on September 19, 2008. Any increase in the number of shares held in a money market account after the close of business on September 19, 2008 cannot be insured and are not guaranteed. However, the money market funds, and not the investor, must sign up for the insurance. The Temporary Guarantee insurance program is scheduled to be in place for only three months, ending on December 18, 2008. The U.S. Treasury Department can extend the program until September 18, 2009, at its sole discretion.

Investors should check with their individual money market funds to determine whether or not the fund has purchase the temporary insurance. Please note that each individual money market fund must purchase its own insurance, so that an institution with multiple money market funds must purchase insurance for each separate fund.