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Putnam mutual fund chief to resign

Chief executive Lawrence J. Lasser will resign from mutual fund company Putnam Investments in the wake of civil fraud charges against the firm and two former portfolio managers and big withdrawals by several state pension funds.
/ Source: The Associated Press

Lawrence J. Lasser is stepping down as chief executive of Putnam Investments in the wake of civil fraud allegations against the company and decisions by several big state pension funds to take money out of the firm’s funds.

Putnam's parent company, Marsh & McLennan Companies Inc., announced Monday the departure Lasser, who over the last 18 years helped build Putnam into the nation’s fifth-largest mutual fund company.

Charles “Ed” Haldeman, senior managing director and co-head of investments at Putnam, was named the new chief executive.

The announcement came one week after federal and state regulators filed civil fraud complaints against Putnam and two former portfolio managers.

Public pension funds in six states — Massachusetts, New York, Vermont, Pennsylvania, Rhode Island and Iowa — pulled more than $4 billion from Putnam last week.

Jeffrey W. Greenberg, chairman and chief executive of Marsh & McLennan, thanked Lasser for his contributions to Putnam’s growth.

But he said the company planned an independent review of policies and procedures that would result in recommendations to “assure that the company operates in accordance with the highest professional and ethical standards.”

“MMC and Putnam are committed to seeing that the interests of Putnam’s clients and investors are well served,” Greenberg said in a statement. “We are taking actions today to address the issues that are confronting Putnam. The kind of conduct that occurred has no place at Putnam. We are taking measures to see that this does not happen again.”

The widening mutual fund scandal has implicated top industry executives, as regulators investigate and draw up a major overhaul of the $7 trillion industry.

On Sunday, Strong Mutual Funds said its board chairman, Richard S. Strong, has resigned amid an inquiry into his personal trading of the company’s funds.

The decision does not affect Strong’s role as chairman and CEO of Strong Capital Management, the adviser to the Strong Mutual Funds, the funds’ independent directors said in a news release.

Last Thursday, Strong acknowledged trading in some of the firm’s funds and said he would reimburse the funds for any losses they may have sustained because of his trades. He also said he would be prepared to resign.

Richard Strong is under investigation by three agencies for alleged improper trading that officials say may have benefited him and his friends and family.

Management fees reaped by mutual fund companies totaled more than $50 billion last year, according to New York state Attorney General Eliot Spitzer.

Lasser, 61, signed an employment contract with Putnam in 1997 that provided a special retirement benefit valued at $15 million in exchange for an agreement not to compete with the firm, and for future consulting. In the last five years, Lasser has earned $5 million in salary and $100 million in bonuses.