Janus and Putnam are playing defensive. Big time.

Putnam is discontinuing its practice of directing commissions to brokers who push more, or set quotas, of its products, The Wall Street Journal reports today. The decision came from board Chairman John A. Hill, whose letter to SEC Chairman William Donaldson about this decision The Journal obtained.

While the practice is legal, as long as the fund companies and their shareholders are rewarded with best execution of trades, regulators are increasingly looking askance at relationships, such as these, that might harm investors by having them buy funds, or share classes, not in their best interest. ( For more on this subject, see this week’s issue of Money Management Executive: "Funds Freeze Broker Kickbacks." )

Meanwhile, Janus is now going to update all its fund holdings every month with a 30-day lag, putting Janus ahead of the Securities and Exchange Commission’s newest reform proposal, The Wall Street Journal reports.

Previously, Janus’ disclosure policy was to frequently report on its top holdings but not take the risk of updating all its other holdings more than twice per year. But since the SEC identified disclosure as one of its next orders of business, Janus has beat it to the punch.

The reasons behind Janus’ move are not clear, but much of the firm’s ideology probably stems from the scandal that it is involved in, albeit not formally. Janus often allowed institutional viewers to peak at holdings as long as they signed non-disclosure agreements. Those days appear to be over.

"Given where we are, we think it's best to have one policy with a consistent schedule," Janus spokeswoman Shelley Peterson told The Journal.

The general argument fund firms have given against full disclosure has been that it would raise fund expenses, be of no used to the average investor and allow certain investors to trade ahead of others. Critics of the companies’ arguments say that moves like this one by Janus make these claims look silly.

Morningstar Associate Director of Fund Research Kunal Kapoor told The Journal: "The argument has always been weak" for fewer disclosures. But that's never been more clear.

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