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SEC Gives Managers of Money Funds Freer Hand

In light of the crisis of confidence in rating agencies following the subprime crisis, the Securities and Exchange Commission will diminish the importance of money market fund managers' reliance on such agencies when investing in short-term debt.

This is expected to have wide repercussions in the $3.4 trillion money market industry, likely resulting in a wider variety of investments by money market funds, particularly lower-rated short-term debt.

But critics counter that rather than lessen reliance on ratings agencies, the SEC should go back to the drawing board to improve their assessments of companies, as many investors continue to rely on Moody's, Standard & Poor's and Fitch.

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