Across the country, customers are firing scandal-tarred Putnam Investments, as massive withdrawals led to a $32 billion, or almost 12%, drop in assets last month.
But Putnam has quietly done some firing of its own. The nation’s fifth-largest mutual-fund firm recently gave notice that it was terminating the retirement plan of a New York trade union — the one that first landed it in legal trouble.
Putnam, a unit of Marsh & McLennan Cos. (MMC), late last month sent a letter to Boilermakers Union, Local 5 in New York, giving it 60 days to find a new investment manager of the union’s 401(k)-style retirement plan.
The union members have drawn attention as being among the more savvy practitioners of market timing involving the rapid trading of mutual-fund shares. From 2000 to 2003, 10 market-timing members of the boilermakers union made more than $4 million in profits through 2,672 trades of Putnam international funds, according to Massachusetts regulators.
Donald McCallion, an attorney for the welfare and vacation fund of Boilermakers Local 5, said he regretted Putnam’s decision, for which he said the investment company provided no explanation.
“We had a very good relationship with Putnam over the years,” he said. “They provided a high level of service.” The plan, with about $40 million in assets and 1,000 participants, is now looking for a new manager.
In a statement, John Brown, head of Putnam’s institutional business, said of the termination of the boilermakers: “Our action is consistent with the many steps that Putnam is taking to enforce strict overall trading policies to protect the interests of our long-term shareholders.” A spokeswoman declined to answer further questions.