Putnam Investments Tuesday said it discharged another nine employees for improper trading, bringing to 15 the total number of staff let go after the money manager became enmeshed in state and federal probes.
Ed Haldeman, the company's new chief executive, said none of the fired employees had managed money for Putnam, a unit of brokerage insurer Marsh & McLennan Cos. Inc. He said "we truly regret" the trading issues that occurred at Putnam.
"This revelation reaffirms the justification for our thoroughness, and there may well be additional charges," said Massachusetts Secretary of the Commonwealth Bill Galvin.
Along with the U.S. Securities and Exchange Commission, Galvin's office is investigating improper trading at Putnam, the No. 5 U.S. mutual fund company.
Haldeman also said in a letter to investors a group of former employees had engaged in improper trading, including about six people who operated in a coordinated manner to market time Putnam funds.
Market timing, which preys on stale prices, has been at the center of a widening probe of the funds industry by New York Attorney General Eliot Spitzer. Though not illegal, the practice reduces a fund's profits and is generally discouraged by mutual funds in a company's prospectus.
Information Putnam gathered about the group's behavior was turned over to federal and state regulators, for whatever action they deem appropriate, Haldeman said.
He also said the company did not enter into any agreements or financial arrangements to allow market timing or late trading with any client or participant. Late trading is illegal and involves the trading of securities after the market close.
The nine employees were fired after Haldeman said the company reviewed the trading in Putnam funds of more than 12,700 employees who worked at the firm between January 1998 and October. Of that number, 5,200 were employed as of Oct. 1.
The majority of the improper trading activity of past and present employees took place between 1998 and 2000, and was predominantly in international and global funds, he said.
Other employees who may have engaged in improper trading in Putnam funds were strongly admonished but not terminated as they were either not sufficiently educated about Putnam's policies or because they stopped when told to, he said.
Federal and Massachusetts regulators in late October accused Putnam of securities fraud, making the company the first to be charged in the industrywide investigation.
Haldeman was appointed to his job in November after Putnam's long-time CEO Lawrence Lasser resigned under pressure as investors pulled billions of dollars from the company. Though Haldeman said in his letter Putnam was taking swift, decisive action to implement positive changes, critics expressed skepticism.
"Everything at Putnam this year has been like a comedy of errors," said fund watchdog Max Rottersman of fundexpenses.com. "What bothers me is they are not coming clean and publicizing what is happening unless they have to. They are not telling the public."