Putnam Investments today agreed to settle securities fraud claims with the SEC in connection with market-timing trades by some of the firm's employees. Putnam agreed to place restrictions on employee trading, adopt stricter compliance policies and procedures relating to trades by employees, and overhaul its corporate governance structure. The SEC has not yet determined the restitution and civil penalties the company will pay.
Putnam will require employees who invest in its own funds to hold them for at least 90 days, and, in some cases, as long as a year. It also agreed to have an independent board chairman, ensure that three-fourths of the board are independent members, and retain an independent compliance consultant to review its policies and procedures to prevent breaches of fiduciary duty, ethics and securities law.
"The required enhancements ... should strengthen all aspects of Putnam's fund operations and provide investors with uncompromised representation by their fiduciaries in the boardroom and at the management company," Stephen M. Cutler, director of the SEC's enforcement division, said in a statement.
Charles E. "Ed" Haldeman, Putnam president and CEO, said, "This agreement underscores our commitment to address the issues at Putnam swiftly and thoroughly in the interests of our investors, clients and employees. It is another important step toward rebuilding Putnam's reputation for integrity and reliability with investors."
Brian S. McNiff, spokesman for William F. Galvin, Massachusetts state secretary, said, "The SEC has reached a settlement with Putnam. We haven't." The state filed a civil lawsuit against Putnam late last month.