The Massachusetts Securities Division and the Office of the Attorney General for the State of New York have sent subpoenas to Putnam requesting information relating to plan expense reimbursement agreements between Putnam and certain unidentified client multiemployer deferred compensation plans. In addition, the subpoenas are seeking information related to Putnam’s relationships with consultants retained by those multiemployer plans , according to the quarterly 10-Q filing by Boston-based Putnam’s parent company Marsh & McLennan Cos.
Also relating to this matter, the Massachusetts authorities have taken testimony from “a number of Putnam employees relating to the same matters,” the filing said. Putnam is fully cooperating with the regulatory authorities, Marsh & McLennan added.
Putnam is no stranger to regulatory scrutiny. In April the firm agreed to pay $10 million in disgorgement and a $100 million penalty in agreements with the U.S. Securities and Exchange Commission (SEC) and Massachusetts Secretary of State William Galvin to settle charges related to the ongoing mutual fund market-timing and late-trading scandal. The sum represented the largest penalty yet, relative to actual harm done to customers (See Details Emerge About Putnam Settlement ).
Further, unlike the other settlements surrounding market-timing and late-trading allegations, the Putnam settlement is the only one as of yet in which the firm admitted guilt. To date, regulators have reached agreements resulting in civil penalties and disgorgements with Alliance Capital Management, Massachusetts Financial Services Co. and FleetBoston Financial Corporation. Detailed in the agreement of the settlement are civil penalties and disgorgements, but in each instance the same language is used – the firm neither admits nor denies wrongdoing in the matter.
Other Marsh Disclosures
Also buried in the regulatory filing was a disclosure that another division of Marsh & McLennan, Mercer Investment Consulting, has received requests for information from the SEC in connection with the agency’s examination of compensation arrangements and other practices of consultants who provide services to sponsors of pension plans (See SEC Looks At Consultant, Pension Fund Relationship ). This includes, among other things, practices with respect to advice regarding the selection of investment advisors to manage plan assets.
Marsh & McLennan said Mercer “is fully cooperating.” No additionally information was provided in the filing.