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MMC sees lower profits for Putnam outside US

US – Marsh & McLennan Cos. has said the non-US operations of its Putnam Investments subsidiary may not be as profitable as its US business.

“It may be difficult for Putnam to establish businesses abroad whose profitability equals that of its business in the US,” MMC said in its annual 10-k filing to the Securities and Exchange Commission.

“No, it is not less profitable,” said John Boneparth, head of Putnam’s international business, in an interview. “Our non-US business is a wonderful story.”

“I think that the reality is that up to the moment profitability has been comparable to the US.”

He saw challenges in the form of a possible change to the business model, whereby Putnam has distribution agreements outside the US with third parties. “We have no plans to change that now,” he said. “In the local market we’re not looking to reproduce the ‘factory’.”

The filing went on: “Although Putnam Investments has expanded its marketing and distribution outside the US, it competes in non-US markets with local and global firms, many of whom have much larger investment management businesses in their respective non–US markets.”

MMC spokeswoman Barbara Perlmutter said she didn’t think it was the case that MMC was making any hints about the future of the non-US businesses. “Putnam is committed to its international businesses,” she said.

Putnam’s top European manager Stephen Cohen told IPE in an interview last year that the firm wanted to “build a significant European institutional business over time”.

The MMC filing added that Putnam’s former chief executive Lawrence Lasser has started an arbitration proceeding against the firm following his dismissal amid the improper trading issue.

“Lawrence J Lasser, former president and CEO of Putnam, has initiated an arbitration proceeding against MMC,” MMC said.

“The arbitration will determine whether and to what extent Mr. Lasser is owed any money under his employment contract with Putnam.” Lasser left Putnam last year amid a probe into alleged improper trading at the firm. Boneparth declined to comment on this.

As of March 4, MMC and Putnam had received complaints in around 70 civil actions based in allegations of market timing activities, the filing said.

MMC is also the parent company of consulting firm Mercer.

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