Four of the country’s biggest state pension funds are backing off their push to place directors on the board of Marsh & McLennan, parent to Putnam Investments, the quartet said on Thursday.

The revelation follows MMC pronouncement that it plans to nominate Zachary Carter, a former federal prosecutor to its board of directors, who was endorsed by the foursome. Carter served as a U.S. attorney in New York from 1993 to 1999.

The AFSCME Employees Pension Plan, the New York State Common Retirement Fund, California Public Employees’ Retirement System and the California State Teachers’ Retirement System initially sought to more easily grab the right to nominate directors due to the firm’s "failure to properly control its money management business and for its severe lack of independent board leadership." The group was upset with MMC’s lack of oversight of Putnam, while things were running amok at its mutual fund subsidiary.

"Zachary Carter’s background as a federal prosecutor makes him an appropriate watchdog for the shareholder’s interest," said Gerald W. McEntee, AFSCME Chairman, in a statement. "As a new independent director Carter strengthens the board by making it more accountable and sensitive to shareholder concerns."

"When investors and management can operate on a level playing field, everyone benefits. The proposed proxy access rule would give shareholders the power they need to effectively work with boards and nominating committees," McEntee said. "The fact that Marsh & McLennan is willing to add an independent director to its board goes a long way to disprove businesses’ claim that proxy access would be destructive."

Putnam has since agreed to settle with the SEC, but the two sides had not yet agreed on a dollar amount. However, Putnam has just recently received another round of subpoenas asking for information on other practices, including directed brokerage and revenue sharing.

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