T. Rowe Price Associates, the big Baltimore multual fund operator, yesterday suspended sales of its money market fund, the Rowe Price Prime Reserve Fund, because it ran out of shares to sell.
The fund was so successful that customers bought all the available shares before the company could complete the paperwork needed to create additional shares, spokesman Steve Norwitz explained yesterday.
The fund was set up to sell 200 million shares at $10 each -- $2 billion worth. Last year customers bought $565 million worth, and the company announced it would seek authority for additional shares at a stockholders meeting April 15.
But since Jan. 1, the fund has sold $700 million worth of shares, averaging $16 million a day, hitting a record $70 million some days, and all but depleting the $2 billion worth of shares.
As a result of the embarassment of success, Rowe Price is out of the money market fund business until March 2, when a special stockholders meeting has been called to authorize an additional $3 billion in shares.
Redemption of Prime Reserve Fund shares will continue as usual, the company said. Automatic reinvestment of dividends will continue, because enough shares have been reserved for that purpose.