Regulators continue to hammer away at Putnam, this time over potential conflicts of interest arising from its multiple role as investment adviser, retirement plan servicer and employer, parent company Marsh & McLennan indicated in its 2004 annual financial report filed Wednesday.
It isn't clear how serious some of these legal issues are, Boston Globe reports, but MMC devoted 11 pages to discussing them.
The Securities and Exchange Commission is looking into referrals between Putnam, Mercer Consulting and other MMC companies.
The Department of Labor is looking into MMC stock trading restrictions that Putnam imposed on its employees in their 401(k)s following revelations of Eliot Spitzer's big-rigging and price-fixing investigation. The company's stock dropped nearly by half, to $24, on the news.
DOL is also looking into whether Putnam funds benefited from errors Putnam made as a retirement plan administrator. The firm has reserved $3 million to reimburse plans that were involved in those errors.
In addition, institutional investors are considering making claims "relating to alleged disclosure failures, misrepresentations and purported breaches of investment management agreements," according to the annual report. On top of this, a former senior executive is planning to sue the firm over the terms of his departure.
The news comes only a week after the firm agreed to repay $153.5 million to investors whose returns were lessened by improper fund trades by Putnam portfolio managers. However, Putnam spokeswoman Sinead Martin told the Globe that strengthened controls and ethics at the firm have "led to renewed confidence," as evidenced by a decision by the Massachusetts state pension to rehire the firm.
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.