Compliance January 10, 2007

SEC Settles ‘Shelf-Space’ Allegations with Former Putnam Chief

The former chief of Putnam Investments, Lawrence Lasser, has agreed to a $75,000 settlement with the Securities and Exchange Commission (SEC), putting an end to allegations that the investment company used mutual fund assets to lure brokerage houses to use Putnam funds, the Associated Press reported.
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Daniel Hawke, head of the SECs Philadelphia office, said the settlement resolves an investigation into Putnam’s payments to more than 80 brokers over a three-year period that ended in 2003. The SEC claimed that Lasser hid the pay-to-play arrangement from Putnam’s trustees.

The SEC said Lasser must not commit any further securities violations and that he had to pay $75,000 in civil penalties, according to the AP.

The settlement agreement amount was far less than the $50 million paid by Putnam to the SEC in 2005 over alleged payments to brokerage houses (See Putnam, Citigroup Agree to $60M “Shelf Space’ Settlement). Lasser was ousted from Putnam in 2003, amid allegations of improper mutual fund trading, at which point he received a $78-million severance payment from the company.

The news of Lasser’s settlement agreement follows word of Marsh’s decision to sell the money management unit for $3.9 billion to Canadian holding company Power Corp (See Marsh & McLennan Agrees to Sale of Putnam).

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