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Portfolio > ETFs > Broad Market

Putnam to Pay $110 Million to Settle Trading Charges

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April 8, 2004 — Putnam Investments will pay $110 million to settle federal and state charges that it permitted so-called market timing trades in its mutual funds, the company and regulators said today.

Under the settlement, Putnam will pay $5 million in restitution to the funds and $50 million in penalties to settle allegations by the Securities and Exchange Commission that the company failed to disclose improper fund trading.

Putnam will pay another $5 million in restitution and $50 million in penalties to settle allegations by Massachusetts that the company failed to halt market timing by members of a labor union who had 401(k) retirement plans through Putnam.

“This case uncovered a corporate culture that turned a resolute blind eye to the most egregious conduct on the part of its managers who indulged in market timing, as well as the favored fund participants who were allowed to market time at the expense of other shareholders,” Massachusetts Secretary of State William Galvin, said in a prepared statement.

Putnam president and chief executive Ed Haldeman said in a statement that the settlements “reflect our commitment to put these matters behind us and continue to move forward as a firm focusing on rebuilding investor confidence and delivering consistent, dependable, superior investment performance over time.”

Market timing involves rapid-fire trading in and out of funds. The practice can hurt long-term shareholders.


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