The deal came after Putnam’s new chief executive officer (CEO)Charles Haldeman met with Connecticut state Treasurer Denise Nappier in November to renegotiate their contract. Per terms of the new deal,Putnam has also agreed to link all fees to be paid by the Connecticut pension fund directly to the firm’s investment performance, through March 2004, Nappier said in a statement.
Putnam was hired on in August to manage $270 million in international assets for Connecticut, but contract renegotiations became necessary after the state placed the Boston-based firm on a “watch list” after allegations arose that two Putnam managers had engaged in market timing(See Market Timing Leads to “Late” Departure of Putnam Fund Managers ). Even with the new agreement, Putnam will remain on the watch list of the $19 billion Connecticut Retirement Plans and Trust Funds, Nappier said.
“The ice under Putnam remains thin,” Nappier said in the statement, “and we will continue to carefully monitor every step they take.”
With an agreement to keep Putnam at the helm of its international investment allocation, Connecticut takes the divergent path of many states that have opted for jettisoning the embattled investment firm since state and federal civil complaints were filed on October 28. The list, which seemingly grows longer every day, includes Connecticut’s New England neighbors Vermont, Rhode Island and Massachusetts (See PA, RI, VT, IA, NY Pensions Fire Putnam)and reaches across the fruited plan to include states such as Iowa, Texas and Washington (See More Pensions Pull Money From Putnam ).
Since taking over the international allocation in Connecticut’s pension fund in August, the portfolio’s value has grown to $291 million.