A consultant working for regulators says problems in Putnam Investments mutual funds could have cost investors about $100 million between 1997 and 2003.[@@]
Regulators hired the consultant to implement a provision in a settlement agreement that Putnam, Boston, reached with the Massachusetts Securities Division and the U.S. Securities and Exchange Commission in April 2004.
Putnam negotiated the agreement to address regulators’ allegations that it may have let portfolio managers make illegal use of its funds to “time the market” through rapid trades.
The agreement called for Putnam to disgorge $5 million in gains and pay a $50 million civil penalty, and it also called for the appointment of a consultant to develop a plan for distributing the funds to investors.
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The consultant, Peter Tufano, a professor at the Harvard Business School, estimates improper trading by Putnam’s employees cost shareholders at least $3 million and investors in Putnam retirement plans and 529 college savings plans $46 million, according to a spokesman for William Galvin, Massachusetts secretary of the commonwealth.