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 weeks issue of Money Management Executive:
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 firms 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.
