The father of the money market mutual fund -- investor Bruce Bent -- was charged with fraud by U.S. regulators on Tuesday over accusations he deceived investors into believing his flagship fund was safe before it broke the buck last year.

The civil charges against the veteran money manager, his son and their investment company come eight months after the Reserve Primary Fund, loaded with Lehman Brothers debt, halted redemptions after the investment bank declared bankruptcy, sparking a run on money-market funds.

The fund's net asset value fell below $1 after Lehman's bankruptcy last September, meaning that investors who thought their funds were safe had lost money.

The fund is being liquidated and its collapse has spurred numerous lawsuits. Its demise has been a stunning turn for Bent, who regulators called the public face of the fund and a longtime advocate of the safety and stability of money market funds.

The Reserve Primary Fund's failure has been a tragedy for investors and the Bents, said Peter Crane, president of Crane Data and publisher of Money Fund Intelligence.

There is no need for a trial sheriff here, the markets have already taken (Bruce Bent) out back and shot him, Crane said.

The Securities and Exchange Commission accused Reserve Management Company Inc, chairman Bruce Bent Sr., vice chairman and president Bruce Bent II and another entity, Resrv Partners Inc, of failing to provide key information about the Lehman holdings to investors, the fund's board of trustees, and rating agencies.

Over a two-day period last September, after news of Lehman's bankruptcy sent shockwaves through financial markets, the Bents engaged in a systematic campaign to deceive the investing public into believing the Primary Fund fund was secure despite its substantial Lehman holdings, the SEC said.

Reserve Management Co said in a statement it is reviewing the SEC complaint and intends to defend itself vigorously.

Bruce Bent Sr., 71, said in the statement that the Lehman bankruptcy created an unforeseeable and out-of-control condition for many parties.

Our management worked extremely hard throughout the chaotic and fast-moving events of September 15-16 and we remain confident that we acted in the best interest of our shareholders, he said.

Bruce Bent II, 42, could not be reached for comment and his attorney declined to comment. The father and son are both of Manhasset, New York.

The Reserve Primary Fund, which had $785 million in Lehman-issued securities as of last September, became illiquid when it was unable to meet investor requests for redemptions.

Money funds are designed to maintain a constant net asset value of $1 per share, and nearly all do. When net assets drop below $1 a share, these funds are said to have broken the buck.

The SEC complaint, filed in U.S. District Court in Manhattan, seeks financial penalties and the repayment of ill-gotten gains.

The agency also said it is seeking to expedite the distribution of the fund's remaining assets to investors, many of which have filed lawsuits in federal and state courts seeking damages for shareholders who had not redeemed their shares as of September 16 when the fund halted redemptions.

The SEC said that since it was created in 1971, the Primary Fund historically invested in very conservative assets such as government securities and bank certificates of deposit.

But, starting in 2007 and 2008, the fund began to purchase riskier commercial paper issued by financial firms including Lehman, Merrill Lynch and Washington Mutual, with the higher yields paid by these securities generating attractive returns for fund shareholders, the SEC said.

(Reporting by Rachelle Younglai in Washington, Martha Graybow and Grant McCool in New York and Svea Herbst-Bayliss in Boston; Editing by Tim Dobbyn)

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