The SEC announced settlements today in enforcement actions relating to mutual fund sales practices at Putnam Investments and Citigroup Global Markets; the firms agreed to pay fines of $40 million and $20 million, respectively.
The SEC accused Putnam of failing to adequately inform Putnam Funds' board of trustees and fund shareholders about "shelf space" arrangements with broker-dealers, according to a news release from the SEC. Putnam agreed to settle the matter without admitting or denying the SEC's findings, and the penalty will be distributed among the affected Putnam funds. Putnam spokeswoman Laura McNamara confirmed that the SEC had accepted Putnam's settlement offer; she said the company is "pleased to conclude the matter" and remains focused and committed to doing what's right for clients.
Separately, the SEC accused CGMI of failing to disclose revenue-sharing programs with roughly 75 mutual fund complexes in exchange for access to "shelf space" within CGMI's retail brokerage network, as well as for steering customers to Class B shares of mutual funds when those customers would have gotten higher rates of return from Class A shares, according to the agency. As part of the settlement, CGMI will offer affected customers the option of converting their Class B shares into Class A shares. CGMI neither admitted nor denied the SEC's findings. A CGMI spokesman couldn't immediately be contacted.