Quantcast
The MFWire
Manage Email Alerts | Sponsorships | About MFWire | Who We Are

Subscribe to MFWire.com's News Alerts [click]

Rating:Feds Knock on Putnam Doors Not Rated 4.0 Email Routing List Email & Route  Print Print
Friday, October 31, 2003

Feds Knock on Putnam Doors

by: Sean Hanna, Editor in Chief

Allegations that Putnam fund managers and analysts market timed Putnam funds may be about to become a Federal case. On Thursday the Boston-based fund firm confirmed that it received subpoenas from two separate U.S. attorney's offices. Those probes follow on investigations by state officials in Massachusetts and by the SEC.

In the short run these probes are increasing the pressure on Marsh & McLennan Companies, Putnam's parent, to clean house at the fund unit. The probes are also causing institutional clients to reevaluate their use of Putnam products.

One of the subpoenas came from U.S. attorney's office in the Southern District of New York which is headed by James B. Comey. A separate subpoena arrived from U.S. attorney's office for Massachusetts headed by Michael J. Sullivan. Both offices are part of the U.S. Department of Justice. Neither Justice Department office has publicly commented on the matter so far.

It is probable that the Federal prosecutors are gathering evidence to determine how or if they will make a case against Putnam or Putnam employees. Most likely any case brought by the Department of Justice would be criminal in nature.

The Boston Globe cites a person involved with the probe as saying that Sullivan's investigators have put together a "voluminous record investigating market timing at Putnam."

The charges brought on Tuesday by William Galvin, Secretary of the Commonwealth of Massachusetts, were civil fraud charges. Penalties in civil cases are financial. Putnam officials have denied that they committed fraud and stress that they are working with all of the different investigations.

Even as outside investigators are probing events at Putnam, the board of Marsh & McLennan is also starting up an internal investigation reports the Wall Street Journal.

Putnam officials failed to inform the board of their parent company about the trading by the four fund managers and two analysts before the scandal hit the media, reports the paper. That failure is creating speculation that Larry Lasser, Putnam's CEO for the past 18 years, now stands on thin ice.

Lasser would be taking the fall for the decision by Putnam executives to not punish the investment professionals who quick timed the funds. Not only did all of the fund managers retain their responsibilities, none were forced to repay their gains on the trades. Galvin's investigators also allege that managers continued to make trades after they were barred from doing so in 2000.

According to the Journal, the directors were considering "lots of alternatives" regarding Lasser's future at Putnam. Lasser himself has not made any public comment on the matter. However, he did pen a letter to the firm's institutional clients on Monday.  

Stay ahead of the news ... Sign up for our email alerts now
CLICK HERE

4.0
 Do You Recommend This Story?



GO TO: MFWire
Return to Top
 News Archives
2021: Q4Q3Q2Q1
2020: Q4Q3Q2Q1
2019: Q4Q3Q2Q1
2018: Q4Q3Q2Q1
2017: Q4Q3Q2Q1
2016: Q4Q3Q2Q1
2015: Q4Q3Q2Q1
2014: Q4Q3Q2Q1
2013: Q4Q3Q2Q1
2012: Q4Q3Q2Q1
2011: Q4Q3Q2Q1
2010: Q4Q3Q2Q1
2009: Q4Q3Q2Q1
2008: Q4Q3Q2Q1
2007: Q4Q3Q2Q1
2006: Q4Q3Q2Q1
2005: Q4Q3Q2Q1
2004: Q4Q3Q2Q1
2003: Q4Q3Q2Q1
2002: Q4Q3Q2Q1
 Subscribe via RSS:
Raw XML
Add to My Yahoo!
follow us in feedly




©All rights reserved to InvestmentWires, Inc. 1997-2021
14 Wall Street | 20th Floor | New York, NY 10005 | P: 212-331-8968 | F: 212-331-8998
Privacy Policy :: Terms of Use