Former Putnam Execs Agree to SEC Settlement

Two former executives of transfer agent Putnam Fiduciary Trust were given permanent injunctions and ordered to pay civil penalties, the Securities and Exchange Commission announced.

The Sec said that on Friday the United States District Court for the district of Massachusetts entered a final judgment by consent imposing permanent injunctions and other relief against the former executives, Karnig H. Durgarian Jr. and Ronald B. Hogan. The two were also ordered to pay civil penalties of $100,000 and $35,000, respectively. Neither admitted or denied wrongdoing as part of the settlement, according to an SEC release.

The SEC’s complaint alleged that the two engaged in a scheme beginning in January 2001 by which they and other executives of PFTC defrauded a defined contribution plan client and group of mutual funds of approximately $4 million. Durgarian was a former senior managing director and chief of operations of PFTC, and Hogan was a former vice president who had responsibility for new business implementation.

Never miss a story — sign up for PLANADVISER newsletters to keep up on the latest retirement plan adviser news.

The Commission said the misconduct arose from PFTC’s one-day delay in investing certain assets of defined contribution client, Cardinal Health, Inc., in January 2001. The markets rose steeply on the missed day, causing Cardinal Health’s defined contribution plan to miss out on nearly $4 million of market gains.

According to the SEC’s complaint, rather than inform Cardinal Health of the one-day delay and the missed trading gain, the defendants decided to improperly shift approximately $3 million of the costs of the delay to shareholders of certain Putnam mutual funds through deception, illegal trade reversals, and accounting machinations. The complaint also alleged that the defendants improperly allowed Cardinal Health’s defined contribution plan to bear approximately $1 million of the loss without disclosing to Cardinal Heath that they had done so, and that certain defendants also took steps to cover-up the wrongful conduct, and, as a result, the conduct was not discovered until January 2004.

The case against the remaining defendant, Donald F. McCracken, a former head of global operations services for PFTC, is proceeding, the SEC said (see Court Trims Three Defendants from Trading Fraud Case).

Lincoln Puts Hayes in Funds Management Slot

Lincoln Financial Group named Daniel Hayes as head of Funds Management, Retirement Solutions, the company announced.

A Lincoln news release said Hayes will spearhead the process of selecting funds to be included in many of Lincoln’s variable annuity, defined contribution, and life insurance products. Hayes will report to Diane McCarthy, head of Product, Distribution and Funds Strategy, Retirement Solutions.

According to the announcement, Hayes’ responsibilities include building relationships with internal partners, including Lincoln Financial Distributors, Retirement Solutions, Insurance Solutions, and Delaware Investments business segments of Lincoln Financial.

Never miss a story — sign up for PLANADVISER newsletters to keep up on the latest retirement plan adviser news.

Hayes comes to Lincoln from Fidelity Investments, where he managed Fidelity’s strategic relationships with insurance companies, including Lincoln Financial.

There he developed strategic business and marketing plans, coordinated Fidelity corporate services and insurance company teams, and managed business objectives including growth and satisfaction of overall relationship, profitability, net flows, assets under management, shelf space, and breadth and scope of business relationships, the announcement said.

«