BOSTON SEC reaches partial settlement with Putnam

BOSTON (AP) -- The Securities and Exchange Commission announced a partial settlement Thursday with Putnam Investments, under which the company will make significant reforms and establish a process for repaying investors harmed by excessive market timing. But Massachusetts' top security regulator said his case against Putnam would continue.
Boston-based Putnam neither admitted nor denied the SEC's findings that the company violated federal securities law by failing "to take adequate steps to detect and deter" market timing trades and "breached its fiduciary duty to investors."
"This agreement underscores our commitment to address the issues at Putnam swiftly and thoroughly in the interests of our investors, clients and employees," said Charles "Ed" Haldeman, who was appointed chief executive last week after the ouster of Lawrence Lasser. "It is another important step toward rebuilding Putnam's reputation for integrity and reliability with investors."
The company had previously promised to make full restitution to investors harmed by improper market timing by Putnam employees or customers.
Market timing is the use of quick, in-and-out trades that skim profits from longer-term shareholders. The practice is not illegal but most funds do not allow it. Regulators have said companies that allowed selective market timing, despite policies against it, committed fraud.
The SEC said the amount of any civil penalty or monetary relief will be determined later. It described the administrative proceeding as "ongoing."
But Massachusetts Secretary of State William Galvin, whose office has also filed a civil complaint against Putnam, excoriated the SEC and Stephen Cutler, its head of enforcement.
"It's just convincing evidence of the ineffectiveness of the Securities and Exchange Commission," Galvin said. "They should be more interested in wrongdoing instead of papering it over, which is what this is."
Galvin said the SEC should not have signed a deal until Putnam admitted wrongdoing, provided a full accounting of alleged misdeeds and was required to pay a fine.