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Subway-Stop Ad Blitz Targets SEC Money-Market Fund Rule Writers

The U.S. Chamber of Commerce is bringing its opposition to money market fund regulation right to the Securities and Exchange Commission.

Beginning next week the business lobby will take over the advertising space inside the Union Station Metro stop in Washington, where many of the agency’s employees arrive for work each morning. The so-called station domination ad buy will consist of more than 30 posters, banners and “backlit dioramas” on the train platforms, above fare card machines and even on the floor.

Featuring large, colorful question marks, the ads argue that money market funds are “strong,” and ask, “why risk changing them now?”

David Hirschmann, a chamber official, said the effort is part of a campaign to highlight questions that business wants to ask regulators about the need for additional rules. Blanketing the SEC’s Metro station with the bright purple and orange placards wasn’t an accident, he said.

“We certainly want to get the attention of those who are capable of giving us the answers,” said Hirschmann, who is president of the chamber’s Center for Capital Markets Competitiveness.

SEC Chairman Mary Schapiro has pushed for the new rules as one of her top priorities, arguing that changes are needed to stabilize the funds and prevent mass withdrawals like those in 2008 that contributed to the financial crisis. Much of the $2.6 trillion industry is opposed to additional regulation.

Dissent Slowing Work

Internal dissent within the commission has slowed the agency’s work on the issue. With the SEC’s two Republican members publicly opposed to additional regulations, Schapiro has been courting Democratic commissioner Luis Aguilar to ensure she has a majority vote to issue a plan that could increase capital requirements for the funds or allow their traditional $1 share price to fluctuate.

Aguilar, who rides the Metro to work, remains uncommitted.

“We look forward to putting the subway station into the public comment file,” said John Nester, an SEC spokesman.

In an interview, Hirschmann said the chamber doesn’t know if the SEC employees working on the rule use the Union Station stop for the Metro. While he declined to reveal the cost of the campaign, he said it will continue as the SEC gets closer to issuing its proposal, which is expected in the coming weeks.

The chamber also brought corporate treasurers to Washington to meet with policy makers on the issue earlier this year and has set up a website,

The regulation is opposed by major mutual fund firms, including Fidelity Investments and Vanguard Group Inc. While the chamber’s members include about 40 mutual-fund companies, Hirschmann said that opposition extends to non-financial companies that use the funds to manage their cash for meeting short-term expenses.

Funds’ ‘Vital Role’

“When you are managing your week-to-week and day-to-day cash flow, money-funds play a vital role,” Hirschmann said. The chamber’s involvement “shows the intensity we feel about how fundamental money market funds are to broader American business.”

Once seen as among the safest of investments, money market funds rose to the top of regulators’ concerns after the September 2008 collapse of the $62.5 billion Reserve Primary Fund. Its troubles triggered a broader run that calmed only when the Treasury Department temporarily guaranteed shareholders against losses and the Fed began buying fund assets at face value to help them meet redemptions.

The funds are used by millions of U.S. households and companies as a vehicle for parking cash that can be quickly accessed for paying bills. They also help investment managers hold on to customers as they shift funds between asset classes.

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