Putnam Investments' chief executive officer says the rehiring of a leader for its institutional sales division last week is another step in the right direction for the Boston fund company's turnaround from its regulatory scandals.

Sandra D. Whiston "knows everything we have been through, and for someone of her stature to come back indicates that there are positive things at Putnam," said Putnam President and CEO Ed Haldeman in an interview Thursday.

Putnam had announced that day that Whiston would take over as head of institutional sales and relationship management on April 12. She left Putnam eight months ago for Fidelity Management and Research, the mutual fund giant's investment advisor arm, after working 18 years in Putnam's institutional business.

Haldeman said Whiston was a highly recruited executive who left Putnam for its cross-town rival in August because of the regulatory scrutiny Putnam had endured since October 2003 when federal and state authorities made it the first mutual fund company charged with allowing market timing in its funds.

"It was a tough time for Putnam, and this was a big, prestigious job at Fidelity," Haldeman said. He added that he had stayed on good terms with Whiston and sometimes saw her as he walked home from the financial district in Boston.

"There aren't any things about Putnam, good or bad, that she doesn't know about," Haldeman said. "This hiring is a strong endorsement about where we are and the positive trends here."

Whiston, who initially joined Putnam as a fund accountant, worked both as an individual contributor and as a manager in institutional sales and marketing. She has developed and managed teams for product management and investment services, investment strategy and research, and business strategy.

She succeeds Jeffrey Gould, who resigned recently to take a job at a hedge fund in New York. Whiston was unavailable to comment before taking up her job at Putnam.

Putnam, a unit of Marsh & McLennan Cos., has been working hard to repair its reputation. The effort began in November 2003 when it promoted Haldeman to succeed Lawrence J. Lasser, who was ousted as president and chief executive officer.

In promoting him, Putnam was betting that he could reproduce his performance as chief executive of Delaware Investments in Philadelphia. Taking control in 2000 of a company that had posted 10 years of asset outflows, he left for Putnam two years later from a company that again had inflows.

In his first 18 months as Putnam's CEO, Haldeman made wholesale changes, installing a new chief compliance officer, general counsel, chief financial officer, chief administrative officer and head of operations. And 25 of Putnam's 50 highest-paid executives, as of when Haldeman became CEO, are no longer with the company.

Analysts said the company has not yet turned the corner. It has $205 billion of assets under management, down sharply since the scandal struck and Haldeman took over; it managed $263 billion early in the trading scandal.

Financial Research Corp., a Boston company that tracks mutual fund flows, said Putnam had $27.1 billion of outflows from its equity and bond funds in 2003 and another $28.9 billion in 2004. The company has had $3.67 billion of outflows in the first two months of this year.

Haldeman said in an interview in February that it was too early to judge his company's turnaround. "Remember, the problem that hurt Putnam only happened five quarters ago," he said. "The problem is just too recent. People still aren't comfortable with us to return. It is like your parents always told you - you can lose a good reputation overnight, but it takes a long time to regain it once you have lost it."

Haldeman said Whiston's hiring is a step in the right direction. It should help Putnam increase its institutional assets under management, he said, from the $66 billion current total.

"We definitely want to develop more institutional relationships and be a bigger factor in the institutional asset management business than we are now," Haldeman said. "But we are not diminishing our focus on the retail business. Retail asset management remains an important and dominant part of business."

Haldeman said Putnam has the ability to be both a strong institutional asset manager and strong retail manager. "We want to gain share and be bigger in both areas," he said.

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