Putnam Investments reached a settlement with the Securities and Exchange Commission yesterday in which it promised to embark on significant reforms and repay investors who lost out due to excessive market timing in Putnam funds.

The SEC has not set a penalty dollar amount yet. In the settlement, which found that the fund company had "breached its fiduciary duty to investors," Putnam neither admitted nor denied wrongdoing.

The news had New York and Massachusetts regulators come out swinging. New York Attorney General Eliot Spitzer called the settlement "a joke."

"I am outraged at the SEC," Massachusetts Secretary of the Commonwealth William Galvin, told Reuters. "There is a lack of vigorous enforcement, and this merry-go-round is costly to investors. The SEC should expose wrongdoing. Putnam has not come clean.

"The SEC’s enforcement is obviously totally ineffective. We want to clean up the industry thoroughly, and our investigation is going to continue," Galvin guaranteed. Further charges will be levied against a number of executives high up the ladder at Putnam, he added.

Galvin’s office is now investigating short-term trading in the personal accounts of Putnam General Counsel William Woolverton, The Wall Street Journal reports today. But Putnam new CEO Charles Haldeman told The Journal he had reviewed Woolverton’s trading records and did not find any evidence of rapid trading.

Spitzer, in a statement, said the settlement should not be viewed as a template and that he would continue in his own investigation.

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