SEC Proposal Would Saddle Directors with Assessing Credit for Money Market Funds
The SEC has proposed eliminating the credit rating criteria for eligible securities for money market funds. Instead, the Board (or its delegate) would have to determine whether the security’s issuer “has the highest capacity to meet its short term funding obligations” or presents “minimal credit risks.” The Board would also assume responsibility for assessing credit risks of securities underlying repurchase agreements.
OUR TAKE: The Board now will shoulder the responsibility for credit issues. It essentially forces the Board into portfolio management decisions.