Putnam Investments terminated nine employees — none of them money managers — following its comprehensive review of employee trading in the company's funds over the past six years, Charles "Ed" Haldeman, Putnam chief executive officer, wrote to investors in a letter today. Mr. Haldeman said the nine had "knowingly engaged in improper trading in Putnam funds," mostly between 1998 and 2000, "predominantly in international and global funds." Other employees who may have engaged in improper trading were admonished but not fired, either because they weren't sufficiently educated or because they had complied with orders to stop.
Putnam's internal review covered 5,200 employees and 7,500 former employees as of Oct. 1. An earlier review of market-timing activity by Putnam's investment division personnel, pursued in cooperation with regulators, led to departures of six portfolio managers.
Mr. Haldeman said the comprehensive review closes one chapter in Putnam's fight to clean house and win back institutional and retail investors. He said Putnam will continue to strengthen its governance, oversight and compliance standards to make sure that "such breaches never happen again." Asked about outflows of client money that has exceeded $30 billion over the past two months, Mr. Haldeman said the loss of institutional mandates has "slowed dramatically" and is "essentially done," while withdrawals of mutual fund money had lessened as well.
John A. Hill, the independent chairman of the Putnam funds' board of trustees, applauded the comprehensive review of employee trading, saying no other fund complex in the country can likely say with the same degree of confidence that they know the whole story of what went on at the money managers who look after their funds.
