The firings came after Putnam discovered the four now ex-employees cost a new 401(k) plan client $1.5 million because the firm was a day late investing the plan’s money. Chief Executive Officer Ed Haldeman told The Associated Press that that Karnig Durgarian, the Boston-based firm’s chief of operations for investor services, had been dismissed along with one of his subordinates, Virginia Papa, who oversaw operations for Putnam’s defined contribution plans. Two unidentified, lower-ranking employees were also dismissed.
The undisclosed 401(k) client had more than $1 billion in assets that Putnam took over from a competitor in January 2001. The day after the conversion took place, the client’s 401(k) assets were to be invested in Putnam funds, however in this case the money was delayed by a day. During that time, the clients lost money because the markets went up the day the money was being held in cash.
Even though the four fired employees erred in the conversion of the plan assets, Haldeman said ultimately the dismissal were due to the failure to notify and reimburse the client. “As soon as you find out that you weren’t able to get all of the money invested, you notify the client, you give them an explanation to what happen and what the fault was, and to the extent the fault was Putnam’s you write a check for the opportunity cost incurred,” Haldeman told the Associated Press.
Putnam said the client would be reimbursed, as would funds that were affected.