When Peter Scannell appeared before Congress to testify about market timing at Putnam Investments, he hardly appeared the picture of a valiant hero. Scannell was somewhat incoherent, his written testimony riddled with misspellings, according to one of our reporters who was there.
A former waiter at a casino, Scannell got a job as a customer service rep at Putnam's call center, where he noticed irregular trading by a number of clients, including a chapter of the Boilermakers union.
As the story of Scannell's involvement in the scandal unfolded, it continued on a bizarre path, with Scannell claiming he was hit on the head with a brick by a man wearing a Boilermakers sweatshirt outside an Alcoholics Anonymous meeting site, where Scannell was headed.
While Scannell may not appear to be a champion, not only did he do investors a good turn by exposing pervasive greed throughout the industry, but he also helped regulators put an end to the malfeasance in 2003 before it got even more out of hand and became even more of a black eye for an industry that has always touted its fiduciary honor. Although the national media briefly touched on the scandal, it largely dropped it and left it to the financial and business press.
As it was, the market timing was largely confined to three years, beginning in 2000 as the market tanked and hedge funds and mutual funds resorted to desperate measures to seek sure profits.
For the Appeals Court of Massachusetts to deny Scannell's case seeking as much as $15 million of Putnam's $193.5 million settlement with regulators because he failed to sue Putnam-although he did sue the state-appears to be based on a technicality rather than on merit. The appeals court said Scannell is not entitled to an opportunistic "bounty."
Although Scannell might appeal the ruling to the Massachusetts Supreme Judicial Court, it now appears highly unlikely he will ever be compensated.
No, Scannell is not the picture of a hero and probably had no idea of what he was getting himself into. That includes not getting involved, as the court has alleged, for monetary gain.
Scannell certainly made a great sacrifice by coming forward. It is not only fitting to compensate him in some way but to set an example so others can be as brave.
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