California pension giant CalSTRs said Thursday that it has fired Putnam Investments as money manager as the noose around the embattled fund firm tightens.
"Todays action is a huge victory for mutual fund investors," California Comptroller Steve Westly, a CalPERS and CalSTRs board member, said in a prepared statement. "California is delivering a one-two punch against mutual fund mismanagement."
Still, the charges have had a significant impact on the firms reputation as a growing list of state pension funds and public companies have since cut ties with Putnam.
State and federal regulators have accused Putnam for allowing certain clients and its own fund managers to profit from stale prices by rapidly trading in and out of its funds. The company is also accused of failing to act when its compliance office reported these improper trading activities. Last month, Putnam reached a settlement with the Securities and Exchange Commission and promised restitution to shareholders and more stringent market timing controls. The decision from the California State Teachers Retirement System, the No. 3 U.S. pension plan with $107 billion in assets, comes on the heels of a similar announcement from sister fund CalPERs, the nations biggest pension plan, which voted last month to terminate its relationship with Boston-based. Putnam. CalSTRs plans to seek other fund managers to better handle its $312 million in assets and has distributed them among other firms already managing U.S. equity portfolios for CalSTRS