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April 05, 2004 at 08:00 PM
Opening a new front in the scrutiny of mutual funds, Massachusetts regulators are investigating whether Putnam Investments defrauded customers by improperly paying rebates to favored retirement plans at the expense of other investors in the big mutual fund company, according to documents and people familiar with the matter.
In one case, Putnam, a unit of Marsh & McLennan (MMC) and the nation’s sixth-largest fund firm, agreed to give the retirement plan of a New York trade union expense-rebate checks of $40,000 a year, according to internal Putnam e-mails, some of which are part of a state regulatory proceeding against the company.
The Massachusetts Securities Division, overseen by Secretary of the Commonwealth William Galvin, is also looking into how the retirement plan of the trade union, Boilermakers Local 5 in New York, used the rebate money, which is intended for administrative expenses for the benefit of the plan’s 1,000 covered employees, according to a person familiar with the matter. Additionally, investigators are examining whether the union trustees of the plan personally benefited from the payments, this person says.
