Putnam Says Ex-CEO Hid Abuses, Fights SEC Fines

Putnam Investments accuses its ex-CEO of covering up improper trading at the company, which is planning to fight the Securities and Exchange Commission over fines levied in the case.

In documents released by the SEC this week, Putnam wrote that former CEO Lawrence Lasser knew employees were violating company rules but said nothing in order to protect his compensation, which totaled more than $100 million over the last five years.

"When it came time to respond to evidence of market timing by Putnam employees, Lasser made a conscious decision to stick his head in the sand," Putnam said in the documents.

Market timing is the quick buying and selling of mutual fund shares, which profit only a small number of employees and investors. Putnam last fall was the first of the mutual fund firms to be charged with securities fraud for improper trading, a practice that enveloped the entire industry in scandal.

The independent board of trustees of the Putnam Funds found that in addition to Lasser, two other top executives did not reveal their knowledge of market timing abuses at Putnam.

Board chairman John Hill told Reuters on Tuesday, "There were three officials at Putnam who had knowledge of the market timing activities of the Putnam employees in 2000 and 2001 who we felt were in a position of responsibility that they should have informed the board."

Hill named former chief investment strategist Tim Ferguson and general counsel William Woolverton, who still works at Putnam.

Putnam agreed to a partial settlement with the SEC last year, but the amount of fines was not finalized. The fines are set to be discussed at an April 19 hearing. A source familiar with the matter said the SEC is seeking at least $138 million in penalties, plus disgorgement.

A spokeswoman for Putnam said the company is prepared to pay a reasonable penalty that is proportionate to the conduct at issue.

You may like these other stories...

The US Securities and Exchange Commission (SEC) has chosen a former partner and vice chairman with Deloitte LLP as its new chief accountant.James Schnurr, who specialized in financial and SEC reporting for public companies...
Summer is a time for kicking back and playing a few round of golf with friends, for example. But if you're on the green, you'd better be careful: The SEC may be looking over your shoulder.In July, the SEC announced...
An examination initiative launched by the US Securities and Exchange Commission (SEC) earlier this week will enable the agency to evaluate whether municipal advisors are complying with new SEC rules that went into effect...

Already a member? log in here.

Upcoming CPE Webinars

Sep 9
In this session we'll discuss the types of technologies and their uses in a small accounting firm office.
Sep 10
Transfer your knowledge and experience to prepare your team for the challenges and opportunities of an accounting career.
Sep 11
This webcast will include discussions of commonly-applicable Clarified Auditing Standards for audits of non-public, non-governmental entities.
Sep 24
In this jam-packed presentation Excel expert David Ringstrom, CPA will give you a crash-course in creating spreadsheet-based dashboards. A dashboard condenses large amounts of data into a compact space, yet enables the end user to easily drill down into details when warranted.