Senior officials of the $63 billion Reserve Primary Fund, the US money market fund whose implosion last September helped deepen the global financial crisis, were charged with fraud on Tuesday by the Securities and Exchange Commission.

Bruce Bent Senior and his son, Bruce Bent the second, their company, Reserve Management, and trustees were accused by the regulator of hiding or failing to provide key facts to investors and trustees in the two days after Lehman Brothers sought bankruptcy protection on 15 September.

The fund owned $785 million in Lehman debt that became worthless as a result of the bankruptcy. The Reserve eventually told shareholders their investment was worth only 97 cents in the dollar, making the money market fund the first in 14 years to “break the buck”, or fell below $1 per share – meaning investors would not get back what they had paid in.

The event triggered a run on money market funds, with investors pulling out $200 billion within a few weeks, threatening the funds’ reputation as a safe harbour.

Regulators became extremely concerned because of the funds’ crucial role in the financial system – they own 40 per cent of all commercial paper, and provide daily liquidity in the bond markets.

“The fund’s managers turned a blind eye to investors and the reality of the situation at hand before the fund broke the buck,” said SEC chairperson Mary Schapiro.