Market timing in Putnam Investments mutual funds lowered long-term investors' returns by $48.5 million, the Securities and Exchange Commission announced Thursday. And market timing by Putnam employees depleted returns by an additional $4.4 million, including interest. As a result, the firm must now pay repay a total of $153.5 million to customers out of a total $193.5 million in fines and restitution.

The SEC made the discovery through an independent study by Harvard Business School Professor Peter Tufano.

Putnam CEO Charles Haldeman issued a statement saying that shareholders would be reimbursed "fully and fairly," while the fund board Chairman John A. Hill said he hoped they would be repaid by the end of the summer. He estimated that the amount each investor will receive will range between five cents and $200.

Peter Bresnan, an associate director in the Commission's division of enforcement, said, "The Commission staff appreciates the service Prof. Tufano has provided as an independent consultant in the Putnam matter. The staff has reviewed the methodology Prof. Tufano used in arriving at his calculations, and has determined that Prof. Tufano's methodology is acceptable as applied to the facts at issue." However, Bresnan said, the approach Tufano took in this case may not apply to other market-timing cases.

Hill called the scope of Tufano's review "without precedent in the mutual fund industry."

Subscribe Now

Access to premium content including in-depth coverage of mutual funds, hedge funds, 401(K)s, 529 plans, and more.

3-Week Free Trial

Insight and analysis into the management, marketing, operations and technology of the asset management industry.