Riverside County has withdrawn $10 million in employees' retirement money from mutual funds managed by Putnam Investments, a firm caught up in a growing Wall Street scandal.
"We're saying [to employees] that we don't think it's appropriate that you have your money there -- one, because you may get hurt financially, and two, because the practice [of which Putnam is accused] is bad and needs to be discouraged," said county Tax Collector Paul McDonnell.
"Our employees shouldn't have to suffer financially because of the alleged unscrupulous actions of Putnam, and we're doing everything in our power to keep them from being harmed," said John Tavaglione, county Board of Supervisors chairman, in a written statement.
Attempts to reach Putnam officials were unsuccessful late Thursday.
Last week, the Boston firm settled with the Securities and Exchange Commission, which accused Putnam of failing to stop company insiders from making short-term trades that benefited their own holdings. The company still faces several class-action lawsuits, as well as investigations by New York and Massachusetts authorities.
Several other mutual fund companies are under investigation, and Congress is trying to reform the $7-trillion industry. Nearly half of all American households own mutual fund shares.
Tavaglione said the county is reviewing all funds offered to its employees to make sure they meet standards. A report will be released within one month.
Putnam, the fifth largest U.S. mutual fund company, has lost many billions in investments over the scandal. The California Public Employees Retirement System, which handles traditional pension funds for Riverside County and many other local public agencies, pulled $1.2 billion in assets from Putnam this month. Massachusetts and Oregon have taken similar steps.