The U.S. Securities and Exchange Commission says it has filed criminal charges against 6 former officers of Putnam Fiduciary Trust Company.
SEC officials say the problems involved began when Putnam Fiduciary, Boston, a unit of Putnam Investments, made a 1-day delay in investing about $4 million of a client’s retirement plan assets.
Rather than telling the employer client about the error, the defendants “engaged in a fraudulent scheme to conceal and cover up” the error, SEC lawyers allege in a complaint filed in the U.S. District Court in Boston.
The defendants “schemed” to shift about $2.7 million of the losses to Putnam mutual fund shareholders by making “after-the-fact changes to the dates and the prices at which the plan had purchased and sold mutual fund shares,” and they let the retirement plan client bear the rest of the loss, the SEC lawyers allege.
The SEC says it is not charging Putnam Fiduciary or Putnam Investments, which is a unit of Marsh and McLennan Companies Inc., New York, because Putnam Fiduciary reported the problems itself and provided “swift, extensive and extraordinary cooperation.”
The defendants named by the SEC are Karnig Durgarian Jr., former chief of operations for Putnam Fiduciary; Donald McCracken, the company’s former head of global operations services; Virginia Papa, the company’s former director of defined contribution servicing; Sandra Childs, a former managing director who ran Putnam Fiduciary’s compliance department; Kevin Crain, a former managing director who ran Putnam Fiduciary’s plan administration unit; and Ronald Hogan, a former vice president who was in charge of new business implementation at Putnam Fiduciary.
Five of the defendants could not immediately be reached for comment.