June 6, 2013
Time for Investors to Duck and Cover?
The canary in the financial coal mine is beginning to choke. Today the SEC announced that it is tightening the noose around investors. The latest to come out of the SEC is a significant piece of news to anyone who has a 401(k), and especially for those who rely on money market funds to safely park their money. The 2008 financial crisis saw some money funds the subject of runs, especially by institutional investors who are capable of moving large blocks of money with the push of a button. Since then, there has been an ongoing debate on what steps, if any, to take to prevent such a run in the future. The creation of capital controls is nothing new, and to some extent they have existed in money market funds for a number of years. Currently on the table are two distinct proposals. The first is directed at institutional investors' ability to withdraw money during a time of financial crisis. The second proposal would grant fund boards that...(Read Full Post)