Bruce R. Bent

Bruce R. Bent is often credited with inventing the world's first money market fund, The Reserve Fund, with Henry B. R. Brown in 1970. This financial product was recognized by the American Museum of Financial History, an affiliate of the Smithsonian Institution, for its importance and impact on the nation's financial history. Whilst wholesale 'money was bought and sold' before the Reserve Fund, Bruce Bent introduced a formal discipline and developed 'rules' for this 'game'. The result is an an entire industry now worth more than US$3.0 trillion, serving tens of millions of investors. Mr. Bent graduated with a bachelor's degree in economics from St. John's University in New York.

The original Reserve Fund was designed for zero headline risk. The idea was to give investors immediate liquidity and safety for their money above all else. The money market fund was created to provide effective cash management, a dollar back for every dollar invested and beyond that a reasonable rate of return.

In 2001, Bent was the Republican candidate for Nassau County Executive. Before he was chosen as the Republican candidate, he received the endorsement of the Conservative Party and ran with little assistance from the county's Republican Party. Promising to improve the county's financial situation and work for a salary of $1 a year, he lost to Democratic candidate Tom Suozzi.

On September 17, 2008, The Reserve Primary Fund became the first money market fund in 14 years to "break the buck" allowing share value to fall below $1 and subjecting investors to financial losses. The decline in value resulted from The Reserve board's decision to reduce the value of the fund's Lehman holdings from approximately $785 million to zero. This followed the Lehman bankruptcy two days prior. Investors began a run on the Primary Fund that was only halted after 60% of the assets were removed at full value, leaving the remaining investors to bear the resulting losses. Investor assets not redeemed before 3 p.m. on September 16th were frozen indefinately [http://www.reservefunds.com/pdfs/Press%20Release%20Primary%20Liqidation%202008_0929%20FINAL.pdf] . The Reserve Primary Fund closed at a NAV (net asset value) of $.97 on September 16 and fell further to $.95 on September 18. Other Reserve funds were frozen on September 18 and several faced declines below $1.

The failure of the conservative and secure Reserve to maintain the value of its Primary Fund has led to fundamental questions being asked about the role of money market funds. Some money market funds issued statements seeking to reassure investors that their funds were secure. Investors sought dafety during the sub-prime crisis by moving their holdings to US Treasury and Money Market Funds. In one week alone in August of 2007, US$49bn poured into such funds following the collapse of two Bear Stearns Hedge Funds ( Investment Company Institute )

A shareholder lawsuit was filed September 17, 2008, against The Reserve alleging that The Reserve "deviated from its stated investment objective by sacrificing preservation of capital and liquidity in pursuit of higher yields."

References:

External links

* [http://www.reservefunds.com/ The Reserve Fund]
* [http://www.antonnews.com/election/2001/nassaucounty/executive/bent.html Information about the 2001 election, from Anton News]