The Securities and Exchange Commission on Tuesday charged six former officers of Putnam Fiduciary Trust Co., a Boston transfer agent, with defrauding Putnam mutual funds and a corporate retirement plan of nearly $4 million.
The SEC said it would not take any enforcement action against the transfer agent because of its “swift, extensive and extraordinary cooperation” with the commission’s investigation of the alleged fraud.
The SEC, in a lawsuit filed last Friday in U.S. District Court in Boston, said the defendants delayed investing certain assets of a defined contribution plan offered by Cardinal Health Inc. (CAH), for one day in January 2001, causing the plan to miss out on nearly $4 million in market gains, because stocks “rose steeply” that day.
Rather than informing Cardinal Health of the delay or compensating it for the missed gain, the defendants “decided to improperly shift” about $3 million of the costs tied to the delay to shareholders of certain Putnam mutual funds “through deception, illegal trade reversals, and accounting machinations,” the SEC said.
The SEC also alleges that the defendants improperly allowed Cardinal Health’s contribution plan to bear about $1 million in losses without telling the company that they had done so.