Mickey Mouse Joins the Club and Exits Putnam

December 11, 2003 (PLANSPONSOR.com) - The stampede of Putnam Investments' clients heading for the doors continued today with word that the Walt Disney Co. is dropping the sole Putnam fund in the entertainment company's 401(k) plan.

According to news reports, the Burbank, California-based Disney became the latest to fire Putnam – in this case, Disney said, because of lagging performance.

Disney will replace Putnam New Opportunities Fund with Calamos Growth Fund as of December 31.

Because of the unrelenting outflows, Putnam said recently that its total assets under management fell by $32 billion to $245 billion in November (See Putnam Scandal Outflows Continue ).  On November 18, the California Public Employees’ Retirement System (CalPERS) ended its contract with Putnam. The mutual fund company managed $1.2 billion for CalPERS.

Ten state pensions dumped Putnam last month (See  More Pensions Pull Money From Putnam ), as did such companies as Wal-Mart Stores, Merck & Co. and Revlon (See  Wal-Mart Bails Out of Putnam Funds ). The customer exodus comes amid investigations of Putnam and the mutual fund industry by the US Securities and Exchange Commission, as well as by state officials in New York and Massachusetts (See  Spitzer Fund Abuse Probe Pumps Out More Subpoenas ).

Those probes have accused Putnam of allowing some of its clients to engage in late trading and market timing even though Putnam’s prospectus says it discourages such activity. Also, some of its fund managers were accused of making market-timed trades for personal gain (See  Putnam Excuses Two More Fund Managers ).  In a settlement with the SEC, Putnam admitted no wrongdoing, but agreed to reforms and future reimbursement to investors (See  Putnam, SEC Reach Securities Fraud Settlement ).