Public Statement No. 2 of 2008 - Reserve International Liquidity Fund Ltd. (2008-12-16)

Summary

This is a public statement issued by the BVI Financial Services Commission under Section 37A(4) of the Financial Services Commission Act, 2001, concerning Reserve International Liquidity Fund Ltd. It discloses that the Commission issued a directive to the Fund on 17 October 2008 under Section 40(1)(b) of the Act, restricting the Fund's operations and imposing reporting requirements, and provides an update on subsequent engagement with the Fund over a proposed liquidation and distribution plan.

• Suspension required: The directive requires the Fund to forthwith suspend the subscription of shares by new or existing investors, the redemption of shares, and the payment of redemption proceeds, until further notice from the Commission.
• Monthly reporting required: The Fund must submit monthly reports to the Commission covering its cash balance and the institutions holding it, details of its investments (jurisdiction, type, cost and current market value), and updates on all ongoing litigation involving the Fund, until further notice.
• Liquidation plan under review: On 12 November 2008 the Fund submitted a draft Plan of Liquidation and Distribution of Assets proposing an interim pro rata distribution to investors; the Commission responded with its requirements on 5 December 2008 and is awaiting confirmation that the proposals comply with the Fund's constitutional documents and BVI law.
• Proposed variation: The Commission proposes to vary the directive to permit payment of the distribution once the required confirmations are received, and will provide further updates as matters progress.

This statement is specific to Reserve International Liquidity Fund Ltd and does not impose general obligations on other regulated entities, though it illustrates the Commission's use of directive and public statement powers under the Financial Services Commission Act, 2001.

Key obligations

• Reserve International Liquidity Fund Ltd must suspend subscription of shares by new or existing investors until further notice from the Commission
• Reserve International Liquidity Fund Ltd must suspend redemption of shares by investors until further notice from the Commission
• Reserve International Liquidity Fund Ltd must suspend payment of redemption proceeds until further notice from the Commission
• Reserve International Liquidity Fund Ltd must submit monthly reports to the Commission detailing its cash balance and holding institutions, investment details (jurisdiction, type, cost and market value), and updates on ongoing litigation, until further notice

Applies to

Reserve International Liquidity Fund Ltd, mutual funds

Deadlines

• until further notice by the Commission: Suspension of share subscriptions, redemptions and redemption payments remains in effect until the Commission gives further notice
• monthly, until further notice by the Commission: The Fund must submit recurring monthly reports on cash balances, investments and litigation status