Many individual investors are still trying to understand the allegations against Putnam Investments, and figure out what to do with their money.
Timing the market
Regulators allege that Putnam fund managers Omid Kamshad and Justin Scott made hundreds of thousands of dollars in profits by exploiting inefficiencies in the way mutual funds are priced and differences in time zones. An example, drawn from trading records made public by Mass. Secretary of State William F. Galvin, of how Kamshad timed the market to make an alleged profit of $79,494 over six days, an annualized rate of return of 575 percent:
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A closer look
Complaints against Putnam
Complaints against Pru brokers
The Massachusetts watchdogs
Mass. Secretary of State William F. Galvin, right, and his deputy, Matthew Nestor, have earned a reputation for their aggressive pursuit of investment fraud.
(Globe File Photo)
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Mr. Fix-it arrives at Putnam
Charles "Ed" Haldeman Jr. is getting to be an old hand at fixing broken investment firms, and now it's Putnam's turn.
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Market timing investigations and allegations
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Eliot Spitzer, the New York State attorney general, announced an inquiry into mutual fund trading practices two months ago. The following is a snapshot of the companies involved in the investigation to date.
| Company |
Officials involved |
What happened |
Market timing? |
After-hours trading? |
| Strong Financial |
Richard S. Strong |
Ongoing investigation into market-timing allegations; Richard Strong has resigned as chairman. |
Y |
- |
| Putnam Investments |
Justin M. Scott
Omid Kamshad
Two other fund managers |
The SEC has filed suit against Putnam, alleging the the company knew the officials were making market timing trades for their own gain; Putnam CEO Lawrence Lasser has resigned |
Y |
- |
| Citigroup |
Five brokers |
Four people have been fired for allowing market timing trades; one more broker fired for letting clients cancel mutual fund orders after the market closed. |
Y |
Y |
| Fred Alger Investments |
James P. Connelly Jr.
Michal Czajka |
Both men fired, and Connelly has since pleaded guilty to obstruction of justice |
Y |
Y |
| Bank One |
Mark Besson
John AbuNassar |
Both men left the company after being connected to market timing trading by Canary Capital Partners |
Y |
- |
| Alliance Capital Management |
Gerald T. Malone
Charles B. Schaffran |
Both were suspended for helping Canary Capital Partners complete market timing trades. President and COO John D. Carifa, and mutual fund Chairman Michael J. Laughlin, have both resigned. |
Y |
- |
| Canary Capital Partners |
Edward J. Stern |
The hedge fund has agreed to pay $30 million in restitution and a $10 million fine |
Y |
Y |
| Merrill Lynch |
Three senior brokers |
All three were fired for enabling Millenium Partners to complete market timing trades |
Y |
- |
| Millenium Partners |
Steven B. Markovitz |
He pleaded guilty to after-hours trading; now faces up to four years in trading. |
- |
Y |
| Prudential Securities |
Martin J. Druffner
Justin F. Ficken
Skifter Ajro
John S. Peffer
Marc J. Bilotti
Robert Shannon |
SEC has filed civil charges against five former brokers and former branch manager. Prudential is not named as defendant, though expected to be soon. |
Y |
- |
| Bank of America |
Robert H. Gordon
Charles Brceland
Theodore C. Sihpol III |
All three were fired, and the bank has agreed to make restitution to shareholders who lost money. Sihpol, a broker, has been charged with larceny and securities fraud. |
Y |
Y |
| Janus Capital |
None named |
Has agreed to make restitution to shareholders who lost money. |
Y |
- |
Credits: This chart has been adapted from the Thursday, October 30 edition of The New York Times. It appeared on page C6. The chart is being updated by Boston.com.
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From The Globe
Columns and opinions
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Putnam Investments is owned by Marsh & McLennan, which is traded publicly on the New York Stock Exchange.
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PDF: Secretary of State
