PITTSBURGH ( TheStreet) -- Federated Investors ( FII - Get Report) shares have struggled of late, and at least two analysts blame the threat of tough new rules affecting money market funds, which they say are overblown.

Stricter rules on money market funds would be bad news for a wide range of companies, including BlackRock ( BLK - Get Report), Invesco ( IVZ - Get Report), and Legg Mason ( LM - Get Report), says Michael Kim, analyst at Sandler O'Neill. JPMorgan Chase ( JPM - Get Report) and Vanguard also have giant money market funds. However, Federated's exposure to the money market business is more concentrated, accounting for 67% of its revenues so far in 2009.

Based on Thursday's close at $25.33, Federated Investors' shares are down about 9% since closing at $27.91 on Nov. 17.

Money market funds' must prominent critic is former Fed Chairman and Obama advisor Paul Volcker, who has said money market funds are "free-riders," which compete with banks for assets, but aren't subject to the same kind of strict rules and regulations.

Money market funds didn't attract the same kind of publicity as the woes of big banks like Citigroup ( C - Get Report), Bank of America ( BAC - Get Report), but they have had their share of problems lately. The $62.5 billion Reserve Primary Fund "broke the buck" last September, when its net asset value fell below one dollar due to its investment in Lehman Brothers' commercial paper. That caused a run on money funds, which according to The Wall Street Journal is a $3.7 trillion dollar industry.

The Securities and Exchange Commission proposed new regulations in June, and is expected to come out with a rule early next year. The President's Working Group, which consists of the heads of the Federal Reserve, the U.S. Treasury, the SEC and the Commodity Futures Trading Commission, was expected to issue recommendations Dec. 1, but so far has not done so.

The greatest threat to money managers would be a required floating net asset value, as it would seriously damage the appeal of money market funds to many institutional investors such as municipalities, who rely on the NAV being fixed at one dollar for accounting purposes. However, Kim believes such a measure is unlikely to be put in place.

In addition to the regulatory fears, Jeffrey Hopson, analyst at Stifel Nicolaus, says worries of a "bond bubble" may also be hitting Federated shares, as bond funds are Federated's second largest revenue generator. However, Hopson believes many investors worried about bonds being overvalued would respond by moving their money into money market funds, so the damage to Federated would be limited.

-- Written by Dan Freed in New York.

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