Putnam Investments is in hot water with the Securities and Exchange Commission again, this time paying a $40 million fine because of revenue-sharing arrangements. The SEC said that the beleaguered fund company did not disclose to the fund boards and shareholders conflicts of interest associated with shelf space at broker/dealers. The company has not admitted to or denied findings but has agreed to settle the matter.

Putnam Retail Investment Limited Partnership, the fund company's distributor and affiliate, entered into marketing arrangements with more than 80 broker/dealers designed to promote Putnam funds. All these agreements were primarily based on formulas related to gross or net fund sales and/or asset retention.

Between 2000 and 2003, more than 60 broker/dealers received directed-brokerage commissions from Putnam funds, a practice banned by the SEC last summer. The rest received cash payments, which ranged between 10 and 35 basis points for gross or net sales and 1.5 to 15 basis points for retained assets.

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