A federal jury in Manhattan absolved investing pioneer Bruce Bent and his son, Bruce Bent II, of securities fraud on Nov. 12. The verdict, which came after a month-long trial, is a win for Duane Morris and a blow to the U.S. Securities and Exchange Commission in one of its few attempts to hold individuals culpable for the financial crisis.
The SEC brought a civil complaint against the Bents in 2009, alleging they misled investors about the health of their flagship $62 billion money market fund, the Reserve Primary Fund. The fund “broke the buck”i.e., fell below the sacred $1 per share markon Sept. 16, 2008, the day after Lehman Brothers declared bankruptcy. Lehman’s collapse wiped out $785 million of the Primary Reserve Fund’s assets. Shareholders got spooked and started to redeem their shares en masse. According to the SEC’s complaint, the Bents made false statements on Sept. 15 and Sept. 16 about the fund’s liquidity, putting “their own financial and reputation interests ahead of the Fund and its shareholders.”
