Two sec commissioners blast money fund review process

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Aug 28 The two Republican members of the U.S. Securities and Exchange Commission said they were "dismayed" by the agency chairman's comments on reforming money market funds, and called for new reform ideas such as giving funds more discretion to limit withdrawals in times of crisis. The statement issued Tuesday by commissioners Daniel Gallagher and Troy Paredes marked their first extensive comments since SEC Chairman Mary Schapiro said last week that she had failed to gain the votes on the five-member body to move forward with a proposal to strengthen the $2.5 trillion industry against future runs by investors. Schapiro - an Independent - had sought new changes like requiring the funds to build up "capital buffers" or move away from their $1 per share net asset value, citing problems the funds suffered during the financial crisis.

The two commissioners said in their statement they want the agency rather to consider what they called "discretionary gating." That would allow fund boards to restrict redemptions without having to liquidate funds, as is now required, and not coupled with buffers.

"Regrettably, the Chairman dismissed this approach," they wrote.

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