An independent consultant says that rapid in-and-out trading in mutual funds at Putnam Investments cost investors as much as $100 million, a figure that is 10 times the previous estimate of damages, The Wall Street Journal reports.
Regulators appointed Harvard Business School Professor Peter Tufano, according to the Boston Globe, to assess the extent of damages caused by market timing at Putnam. Boston-based Putnam, the country's seventh-largest mutual fund company, was one of the first ones to be slapped with civil fraud charges in the industry-wide scandal that surfaced in the fall of 2003.
In settling with the Massachusetts Securities Division and the Securities and Exchange Commission last April, Putnam, which did not admit or deny wrongdoing, agreed to pay $110 in penalties, with $25 million of that in restitution fees.
In light of Tufano's findings, regulators may ask the fund firm to pay up another $75 million in restitution. William Galvin, Massachusetts Secretary of the Commonwealth, who oversees the state's securities division, confirmed the $100 million estimate. He added that regulators would determine which individual investors were shortchanged by the trading and return them the money, though, he said, that could take a while.
The staff of Money Management Executive ("MME") has prepared these capsule summaries based on reports published by the news sources to which they are attributed. Those news sources are not associated with MME, and have not prepared, sponsored, endorsed, or approved these summaries.
