Putnam closes $12.3 billion money market fund

by Tina Kells | September 18, 2008 at 11:13 am

916 views | 27 Recommendations | 6 comments

The carnage continues in the United States financial markets, and there are no signs that relief will come soon. Despite intensive, and unprecedented, government intervention, major players in the financial world continue to betray the market's weakness.

Thursday morning started off looking good, as Central Banks across the globe flooded the markets with cold hard cash in an attempt to boost investor confidence. It looked like it was working, but later in the day Putnam Investments threw a wrench into the artificial resuscitation effort by announcing the closure of a $12.3 billion money market fund.

Putnam stated that it had to close its Prime Money Market Fund in order to protect investors; so much for that infusion of cash bolstering investor confidence. Money market funds have long been considered a very safe place to invest, and this latest move by Putnam Investments is seen by some analysts as the beginning of a very frightening trend of protectionism in the financial sector.

Putnam Investments has closed a $12.3 billion money-market fund to limit losses to its investors, the large mutual fund company said today. The highly unusual announcement is the latest sign that tremendous financial pressures are now threatening even some of the safest kinds of investments.

The Prime Money Market Fund was open only to institutional investors. Putnam said in a statement that its board decided to close the fund last night after receiving a large number of redemption requests. The company said it could only honor those requests by selling assets at a loss, reducing the value of the remaining shares.

Putnam said it decided instead to liquidate the fund and spread any losses evenly among all the investors. It is not clear how much of a loss, if any, the shareholders will absorb. "We wanted to treat all shareholders equally," said spokeswoman Laura McNamara. She said it was "premature" to discuss how much of a loss, if any, shareholders will incur.

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lilcompanion

at 21:58 on September 18th, 2008

lilcompanion has contributed a photo to this story.

Milieunet

flagged this story as Good Stuff

at 03:31 on September 19th, 2008

Tina Kells, I like this story. It's good stuff.

Yep, USA-mess, it looks indeed like the worldfamous MASH hospital, you may know from television.

The USA need some churgery to solve the problems, may be some MASH-specialist can help.

René

flagged this story as Good Stuff

at 06:03 on September 20th, 2008

Another fund reveals chicanery. Invested in some bad deals, huh? More to investigate. More to freeze their CEO and CFO assets, etc.

bill hicks

flagged this story as Good Stuff

at 17:17 on September 20th, 2008

Tina Kells, I like this story. It's good stuff.

I had a money market account will Merrill in 1979 to 1982 that lost money a few times. There were not very many available at the time and I think minimum was 50k to open.

This upheaval is much worse and no one should hold money in these accounts even with fed backing.