According to the SEC settlement order, the regulator charged that Scott and Kamshad violated their responsibilities to fund shareholders by engaging in short-term trades in their Putnam-administered deferred compensation and retirement accounts.
The SEC said Scott agreed to pay the civil penalty in addition to $489,439 in disgorgement of ill-gotten profits and $159,475 in prejudgment interest, while Kamshad agreed to pay disgorgement of $57,157 and prejudgment interest of $13,709 as well as the $400,000 civil penalty. Half of the total may also be used to offset a related state action.
Without admitting or denying the charges, the two former managers also agreed to a suspension from the association with any investment adviser for a year.
The two mutual fund managers were ousted from Putnam in October 2003 after it was revealed by Putnam they were taking advantage of mutual fund market timing in their personal accounts.
The SEC said in 2004 that Scott and Kamshad received compensation in 2002 that surpassed that of the chief executive of Putnam parent Marsh & McLennan Cos., Jeffrey Greenberg. Greenberg received $6.8 million in salary, bonus, and restricted stock awards.