Putnam reaches agreement with SEC
US – Putnam Investments has reached agreement with the Securities and Exchange Commission over its alleged failure to control the market timing activities of some of its staff.
But Attorney General Eliot Spitzer said his investigation goes on - and that the agreement fails to address critical issues.
“Under the terms of the order agreed to today, Putnam will institute a number of remedial actions,” the asset manager, part of Marsh & McLennan, said in a statement.
“These include new employee trading restrictions, enhanced employee trading compliance, and oversight by an independent third party and the SEC of the calculation of the amount of restitution to be made by Putnam for losses attributable to excessive short-term trading by Putnam employees.”
Putnam would also retain an independent compliance consultant, undertake periodic compliance reviews and be certified for compliance with the SEC.
“The order also contemplates civil monetary penalties to be determined at a later date,” it added. Putnam is not admitting or denying any violations.
"This agreement underscores our commitment to address the issues at Putnam swiftly and thoroughly in the interests of our investors, clients, and employees," said Putnam’s new president and chief executive Charles Haldeman.
Attorney General Spitzer said the measures “represent only a starting point for needed industry reforms in fund governance and oversight and do not address crucial issues involving restitution to fund holders, fines and penalties”.
He added: “Most important, the agreement does not address fundamental issues pertaining to the structural reforms necessary to ensure that investors are charged the lowest possible fees.”
He said that mutual funds have agreed to fees that benefit management companies at the expense of investors. “As such, this document fails to address the critical issue facing mutual fund governance. The SEC's document should not be viewed as a template for settlement with our office. Our investigation of Putnam is continuing.”