Putnam Announces Changes to Fees for Retail Funds

Putnam Investments said it will make sweeping changes to the management fees on its retail mutual funds.

A Putnam news release said the changes are designed to provide investors with a host of immediate and long-term pricing benefits and to make Putnam’s product lineup more competitive in the marketplace. Certain changes will require the approval of shareholders at shareholder meetings to be held later this year.

As of August 1, management fees will be reduced from current contractual levels for mutual funds in the following product categories (on average, as of June 30):

  • Putnam Fixed Income Funds—a 13% reduction; ranging as high as a 34% reduction;
  • Putnam Asset Allocation Funds—a 10% reduction;
  • Putnam RetirementReady Funds—elimination of “wrap” management fees.


In addition, according to Putnam, U.S. growth funds, international funds, and the Putnam Global Equity Fund will have performance fees reflecting the strength or weakness of the investment performance of the given fund. Management fees for these equity funds will decline from their standard fee if the funds underperform their benchmarks and will rise if the funds outperform.

The asset-level discounts for investors will be based more broadly on the growth of all Putnam mutual fund assets, rather than the growth of an individual Putnam mutual fund’s assets. The company said every dollar invested in a Putnam mutual fund essentially benefits all Putnam mutual fund shareholders under this model.

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FINRA Fines Merrill, UBS Related to Closed-End Funds Sales

The Financial Industry Regulatory Authority (FINRA) said it has fined Merrill Lynch, Pierce, Fenner & Smith, Inc. and UBS, as well as some Merrill brokers, for supervisory failures related to the sale of closed-end funds (CEFs).

Merrill Lynch, Pierce, Fenner & Smith, Inc. (acquired by Bank of America) was fined $150,000 and UBS was fined $100,000 for the failures that FINRA said led to unsuitable short-term sales of CEFs purchased at the funds’ initial public offerings (IPOs), according to a news release.

Additionally, FINRA suspended five Merrill Lynch brokers each for 15 days and fined them $10,000 for making unsuitable CEF recommendations to customers. FINRA continues to investigate the activities of former UBS brokers involved in the short-term sales of CEFs.

FINRA said Merrill Lynch and UBS did not have adequate supervisory systems and procedures designed to detect and prevent unsuitable short-term trading of CEFs. The firms failed to provide guidance to both supervisors and registered persons. As a result, certain UBS and Merrill brokers recommended CEF purchases at the IPO and subsequent short-term sales without having a sufficient understanding of the effects that the sales charges and other pricing considerations had on the clients’ investments, according to FINRA.

“Closed-end funds possess complex features that can give rise to unsuitability for short-term investors, particularly when purchased at the initial public offering,” said Susan Merrill, FINRA executive vice president and chief of enforcement. “Neither Merrill nor UBS had adequate supervisory systems and procedures to prevent brokers from engaging in unsuitable short-term sales of newly issued CEFs.”

The five Merrill Lynch brokers sanctioned by FINRA for recommending the unsuitable short-term sales of CEFs are:

  • Kenneth C. Iwelumo of the Newark, New Jersey, branch, whose customers suffered losses totaling approximately $563,000.
  • Ronald Kemp of the Denver branch, whose customers suffered losses totaling approximately $411,000.
  • Joseph Miller of the Springfield, Massachusetts, branch, whose customers suffered losses totaling approximately $130,000.
  • John Ong of the New York City branch, whose customers’ suffered losses totaling approximately $350,000.
  • Michael Kizman of the Schaumburg, Illinois, branch, whose customers suffered losses totaling approximately $221,000.

Merrill Lynch, UBS, and the Merrill brokers neither admitted nor denied the charges, but consented to the entry of FINRA’s findings.

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