Third Avenue Portends Regulators' Fears and Could Spur New Rules
- SEC working on fund liquidity and stress-testing requirements
- Fed has warned about risks moving from banks to asset managers
Junk Bonds Yield Fears of Market Excesses
This article is for subscribers only.
Months of hand wringing about bond market liquidity couldn’t prevent one of U.S. regulators’ worst fears: The freezing up of a $788 million mutual fund that was meant to provide small-time investors with easy access to their cash.
While hedge fund liquidations are taken for granted, the failure of the Third Avenue Focused Credit Fund last week and its decision to halt redemptions is the type of situation the Securities and Exchange Commission dreads. By Monday, SEC staff were calling around to mutual funds with similar holdings, while fellow regulators pored over Third Avenue’s books at its offices in New York.