Chairman Mary L. Schapiro of the Securities and Exchange Commission (SEC) issued a press release on August 22, 2012, announcing that the SEC would not call a meeting to vote on a proposal to introduce additional reforms for money market funds (money funds). There have been several years of controversy regarding whether additional regulatory reform of money funds is warranted, and there had been reports that the SEC would vote on a draft proposal in late August. However, the press release states that three of the four other SEC Commissioners had informed Chairman Schapiro that they would not support the draft proposal prepared by SEC staff. While Chairman Schapiro’s announcement has decreased the potential for structural changes to money funds in the near term, the possibility remains for further action by the Financial Stability Oversight Council (FSOC) or the Board of Governors of the Federal Reserve System (Federal Reserve) to change the regulatory structure or treatment of money funds.

This DechertOnPoint discusses the events that led to the SEC’s impasse on proposing additional reforms, provides an overview of Chairman Schapiro’s statements in the press release and outlines possible actions that the FSOC or Federal Reserve might take in order to address perceived weaknesses in the structure of the money fund industry.