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Case Status:    SETTLED
On or around 03/28/2016 (Other)

Filing Date: November 25, 2008

According to a press release dated November 25, 2008, the class action was on behalf of purchasers or entities who purchased or held the shares of certain mutual funds offered by the Reserve Short-Term Investment Trust, including the Reserve Yield Plus Fund (“Reserve Yield Plus Fund” or the “Fund”) (NASDAQ:RYPYX); (NASDAQ:RYPTX); (NASDAQ:RYPJX); (NASDAQ:RYPQX) during the period from July 27, 2007 to September 16, 2008 (the “Class Period”), including purchasers and holders of the Reserve Yield Plus Fund in connection with the July 27, 2007 offering.

Specifically, the complaint charges the Reserve Short-Term Investment Trust, its parent and affiliates, certain of its officers and trustees and TD Ameritrade Holding Corp. with violations of the Securities Act of 1933, the Securities Exchange Act of 1934 and the Investment Company Act of 1940. The Reserve Short-Term Investment Trust is an open-end, diversified management investment company.

On July 27, 2007, the Reserve Short-Term Trust filed with the SEC a Registration Statement on Form N-1A, a Prospectus and Statement of Additional Information (collectively the “Prospectus”). The Prospectus emphasized the Fund’s focus was to “seek as high a level of current income as is consistent with the preservation of capital and liquidity” and a “stable $1.00 share price.” The Fund later issued reports characterizing the Fund as being an “enhanced cash fund[]” and emphasizing the Fund’s focus on “safety of principal, liquidity and soundness of sleep.”

The complaint alleges that many of the Fund’s purchasers were sold their interests in the Fund by TD Ameritrade and its employees who consistently represented to investors that the Fund was just like a money market fund. Due to defendants’ positive, but false, statements, investors purchased and/or continued to hold shares in the Fund.

On September 16, 2008, The Reserve Fund, an entity related to the Reserve Short-Term Trust, issued a release concerning the Primary Fund, one of its money market funds, stating that the value of the debt securities issued by Lehman Brothers Holdings, Inc. (face value $785 million) and held by the Primary Fund had been valued at zero and, as a result, the net asset value (“NAV”) of the Primary Fund was $0.97 per share. This was major news, as this was only the second time in history that a money market fund had “broken the buck” – that is, reported a share’s value was less than a dollar. In addition, on September 16, 2008, the NAV of the Reserve Yield Plus Fund also collapsed from $1.00 per share to close at $0.97 due to its investment in debt securities issued by Lehman. Thereafter, the Reserve Short-Term Trust suspended providing a daily NAV on the Reserve Yield Plus Fund.

According to the complaint, the true facts, which were omitted from the Prospectus and other statements made by defendants during the Class Period, were as follows: (a) the Fund was no longer adhering to the stated objectives of preserving capital, but in an effort to achieve greater yields was pursuing riskier instruments; (b) despite the fact that many observers believed Lehman would be the next Wall Street failure after Bear Stearns collapsed in March 2008, the Fund purchased a large amount of Lehman commercial paper in April 2008; (c) the Fund was not designed to protect the $1.00 NAV, as were traditional money market funds, and was thus significantly riskier than money market funds; (d) the Fund’s internal controls were inadequate to prevent defendants from taking on excessive risk; and (e) the Fund failed to disclose the extent of its relationship with TD Ameritrade.

On September 28, 2009, Judge Paul G. Gardephe granted the motion to appoint the Reserve Yield Plus Fund Investor Group's motion for appointment as lead plaintiff. The Investor Group's motion for appointment of Hagens Berman Sobol Shapiro LLP as lead counsel was also granted. On November 20, 2009, the lead plaintiff filed a First Amended Class Action Complaint. The defendants filed two motions to dismiss on March 26, 2010.

According to the Order entered on July 29, 2010, the Reserve Defendants and the TDA Defendants request that this Court reconsider its decision to grant the Reserve Yield Plus Fund Investor Group's request on the grounds that this action is governed by the Private Securities Litigation Reform Act of 1995 ("PSLRA"). The PSLRA imposes a mandatory stay of discovery while, as here, a motion to dismiss is pending.

On June 4, 2015, the parties entered into a Stipulation of Settlement. The Settlement was preliminarily approved on November 23. On March 11, 2016, the Court granted final approval of the Settlement and dismissed this case with prejudice.

COMPANY INFORMATION:

Sector: Financial
Industry: Other (Mutual Fund)
Headquarters: United States

SECURITIES INFORMATION:

Ticker Symbol: RYPYX
Company Market: Open-end Fund
Market Status: Open-end Fund

About the Company & Securities Data


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In most cases, the primary company-defendant actually issued the securities that are the subject of the litigation, and the securities information and company information relate to the same entity. In a small subset of cases, however, the primary company-defendant is not the issuer (for example, cases against third party brokers/dealers), and the securities information and company information do not relate to the same entity.
COURT: S.D. New York
DOCKET #: 08-CV-10261
JUDGE: Hon. P. Kevin Castel
DATE FILED: 11/25/2008
CLASS PERIOD START: 07/27/2007
CLASS PERIOD END: 09/16/2008
PLAINTIFF FIRMS NAMED IN COMPLAINT:
  1. Coughlin Stoia Geller Rudman & Robbins LLP (Melville)
    58 South Service Road, Suite 200, Coughlin Stoia Geller Rudman & Robbins LLP (Melville), NY 11747
    631.367.7100 631.367.1173 · info@csgrr.com/
  2. Coughlin Stoia Geller Rudman & Robbins LLP (San Diego)
    655 West Broadway, Suite 1900, Coughlin Stoia Geller Rudman & Robbins LLP (San Diego), CA 92101
    619.231.1058 619.231.7423 · info@csgrr.com/
  3. Miller & Milove
    750 B Street, Suite 1880, Miller & Milove, CA 92101
    619.696.5200 619.696.5200 ·
No Document Title Filing Date
COURT: S.D. New York
DOCKET #: 08-CV-10261
JUDGE: Hon. P. Kevin Castel
DATE FILED: 11/20/2009
CLASS PERIOD START: 07/27/2007
CLASS PERIOD END: 09/16/2008
PLAINTIFF FIRMS NAMED IN COMPLAINT:
  1. Hagens Berman Sobol Shapiro LLP (Berkeley)
    715 Hearst Avenue, Suite 202, Hagens Berman Sobol Shapiro LLP (Berkeley), CA 94710
    510.725.3000 510.725.3000 · info@hbsslaw.com
  2. Hagens Berman Sobol Shapiro LLP (Los Angeles)
    700 South Flower Street - Suite 2940, Hagens Berman Sobol Shapiro LLP (Los Angeles), CA 90017
    213.330.7150 213.330.7152 · info@hagens-berman.com
  3. Hagens Berman Sobol Shapiro LLP (New Seattle)
    1918 Eighth Ave. Suite 3300, Hagens Berman Sobol Shapiro LLP (New Seattle), WA 98101
    206.623.7292 206.623.0594 ·
No Document Title Filing Date