Federated Hermes Files Administrative Procedures Act Suit Challenging Money Market Liquidity Fee

Federated Hermes has challenged the SEC’s July 2023 money market fund reforms which imposed a mandatory liquidity fee framework for institutional prime and tax-exempt money market funds.  In particular, the 2023 reforms require those funds to apply a liquidity fee when daily net redemptions exceed 5% of total assets.  While the SEC has stated that the liquidity fee would help prevent withdrawals and thereby protect the remaining shareholders, the lawsuit argues that the SEC did not conduct an adequate cost-benefit analysis and overstepped its authority under the Administrative Procedure Act.  SEC Chairman Atkins has previously expressed a willingness to work with the industry on the liquidity fee provisions of the 2023 reforms.

Click here for the Ignites article “Federated Sues SEC Over Money Fund Liquidity Fee Rule.”

Click here for the Ignites article “SEC at Work on E-Delivery Rule, Money Fund Reg Revision.”