SEC Adds Link on Web Site for Tips

The Securities and Exchange Commission has changed its Web site to show that it welcomes tips from whistle-blowers after state regulators took the lead in exposing trading abuses in the $7-trillion mutual fund industry.

The SEC has been criticized for lagging behind New York Atty. Gen. Eliot Spitzer and other state regulators who developed mutual fund cases based on tips from people inside the industry. Last week, SEC enforcement chief Stephen Cutler sent a memo to his staff telling them to pay closer attention to tips.

This week, the SEC added a link for enforcement tips on the left side of its Web site, which the agency uses to disclose breaking news or highlight its activities. Visitors to www.sec.gov also are offered a link in the investor information section for “tips and complaints.” Both links connect to the SEC Center for Complaints and Enforcement Tips.

“This is part of a concerted effort to ensure that tips and complaints are handled appropriately and expeditiously,” said Laura Cox, a spokeswoman for SEC Chairman William H. Donaldson.

Earlier this week, the SEC and Massachusetts state regulators filed fraud charges against Boston-based Putnam Investments and two former money managers, Omid Kamshad and Justin Scott.

Massachusetts officials said the Putnam allegations were first raised by Putnam employee Peter Scannell, who took his complaints to the SEC’s Boston office in March. Scannell in September turned to the office of William Galvin, Massachusetts’ secretary of the commonwealth, after the SEC didn’t act on his tip.

Cutler said Wednesday that he was reviewing what happened with Scannell’s tip. In an Oct. 24 e-mail to his staff, Cutler said the enforcement division’s office of Internet enforcement was now logging all incoming tips and how each was handled.