Shareholders of the Reserve Primary Fund may have to wait a little longer to get their final payout check. Massachusetts Secretary of State William Galvin is fighting the distribution plan, arguing that a clawback of funds previously paid to shareholders in the Reserve fund is unfair.

For the full story on the the death of the Reserve and its Primary Fund, see MFWire's timeline.

Galvin made his case in a letter sent to U.S. Judge Paul Gardephe, who is overseeing the case in Manhattan Federal bankruptcy court. Galvin oversees the state's securities division.

According to excerpts of the letter published by the Boston Herald, Galvin's office is "very concerned" for those Massachusetts investors who redeemed their shares before it was frozen a year ago. He points out that those investors did not profit from the fund's collapse and only received a dollar for dollar return on their holding.

"This is not a Ponzi scheme," Galvin wrote. The letter stated that 2,209 Massachusetts investors held some $2.1 billion in the fund.

Meanwhile, SEC spokesman John Nester told the Wall Street Journal that the Commission does not endorse a clawback though it allows for the possibility as part of its efforts "to get investors back their money as quickly and fairly as possible." 

Edited by: Sean Hanna, Editor in Chief


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