Lawrence Lasser, the former CEO of Putnam LLC, has agreed to pay $75,000 to settle SEC charges that he neglected to make sure the company carried out its fiduciary duties.
The Securities and Exchange Commission issued the following statement on January 9, the day that Lasser agreed to pay the settlement fee. According to the SEC, Lasser “did not ensure that Putnam fulfilled its fiduciary duty to disclose adequately to the Putnam Funds’ board of trustees the use of fund brokerage commissions to pay for ‘shelf space’ arrangements or potential conflicts of interest created by this use.”
By agreeing to pay the settlement fine, however, Lasser is not admitting or denying the SEC’s charges against him.
According to the SEC, Putnam directed brokerage commissions that were on the company’s Funds’ portfolio transactions to go to broker-dealers in exchange for “shelf space” (meaning added exposure at the brokerage), from at least January 2000 through November 2003. According to the SEC, Putnam’s Funds’ distributor-Putnam Retail Management Ltd. Partnership-made agreements with over 80 broker-dealers that these broker-dealers were to promote the sale of Putnam funds. The Securities and Exchange Commission alleges that about 20 of these firms were paid cash, while over 60 of them earned brokerage commissions from their Putnam Funds transactions.
The SEC also claims that “Because PRM and Putnam were under common control, the entire Putnam organization benefited from the use of fund assets to defray such expenses. However, Putnam did not adequately disclose this conflict of interest to the Putnam board.”
Lasser is alleged to have known about this conflict of interest, and according to the SEC, he did not tell the Putnam board.
In addition to paying the fine, Putnam’s former CEO has also agreed to cease and desist when it comes to certain violations of the 1940 Investment Advisers Act.
In 2005, Putnam Investment Management paid $40 million in SEC fraud charges for allegedly failing to adequately disclose the fact that it had shelf space deals with broker dealers.
Shepherd Smith Edwards & Kantas LTD LLP is committed to helping clients who have been the victim of broker misconduct recover the money they have lost. Contact Shepherd Smith Edwards & Kantas LTD LLP today.
Related Web Resources:
Former Putnam CEO settles charges with SEC, Investment Executive.com, January 9, 2007
Mutual Fund Manager Putnam Pays $40 Million Fine To Settle SEC Enforcement Action, SEC.gov