From Dow Jones via Morningstar:
Reserve's Primary Fund To Be Valued Below $1/Share
A money-market fund - the Reserve's Primary Fund - has broken the buck, as a result of Lehman Brothers Holdings Inc.'s (LEH) bankruptcy filing, the first time since 1994 that a money-market fund's net asset value has dipped below the $1-a-share level.
New York money manager the Reserve said Tuesday that its Primary Fund is valuing its debt securities issued by Lehman, which have a face value of $785 million, at zero effective at 4 p.m. EDT Tuesday.
Money market funds are for the very risk-averse investor. Their main investment goal is to ensure that the value will remain at $1 per share. For that promise, you get an interest rate that beats a bank CD by a small amount.
As a result, the net asset value of the Primary Fund, which had $64.85 billion in assets as of May 31, was 97 cents per share as of 4 p.m., the firm said in a statement late Tuesday. All redemption requests received prior to 3 p.m. EDT Tuesday will be redeemed at NAV of $1, it said.
After that, it looks like they're putting a freeze on redemptions.
A quick-thinking legal firm is already soliciting annoyed investors. Girard Gibbs has a webpage claiming that they will investigate the freeze and is encouraging annoyed investors to sign up for more info.
Grab a shovel and a mason jar, kids. It's time to bury the savings in the back yard.