The company’s trust investments unit, which manages its pension assets, began moving out of prime funds over a year ago because of the SEC’s proposals, Mims told reporters on a conference call organized by the Chamber.

‘Can’t Replace’

“We have already seen some banks sell us products that really can’t replace what would be lost in our current money- market fund investments,” Mims said. “The proposals, the way they stand now, are going to push more cash to timed deposits with banks or more non-traditional funds where there is less visibility.”

The SEC, along with the Federal Reserve and Treasury Department, has pressed to make money funds safer since the September 2008 collapse of the $62.5 billion Reserve Primary Fund, which triggered a run on other money funds and helped freeze credit markets. The crisis calmed only after the Treasury temporarily guaranteed shareholders against losses and the Fed began buying fund assets at face value to help them meet redemptions.

According to the proposal, funds would have two years to comply with the new rules.

Suit Threatened

Federated has previously threatened to sue to block the changes. A spokeswoman, Meghan McAndrew, declined to say this week whether Federated is still considering legal action. The Pittsburgh-based company oversaw $202 billion in U.S. money market mutual fund assets as of June 30, according to research firm Crane Data LLC in Westborough, Massachusetts.

The company has kept pressure on the SEC in recent months, arguing that the rules would create new, onerous tax-reporting obligations for investors. At least one SEC commissioner, Republican Daniel M. Gallagher, has said his support is conditioned on relieving the tax burden.

“Unless you waive or change the tax rules regarding recognizing gains and losses, every time you redeem shares you have gains and losses,” said George C. Howell III, a partner at Hunton & Williams LLP which represents Federated. “That is a huge administrative and systems problem for institutional investors who invest in money-market mutual funds.”

Money managers Vanguard Group Inc. and Fidelity Investments also have lobbied to shape the rules.