Putnam Faces Off With SEC on Fines

Putnam Investments is preparing for a legal battle with the Securities and Exchange Commission over fines levied for a trading scandal the company says its former chief executive hid to protect himself.

Putnam, the first firm to be charged with securities fraud by regulators investigating improper mutual fund trading, said former CEO Lawrence Lasser knew employees were breaking company rules but kept silent to safeguard his hefty paycheck.

Although Putnam quickly agreed to a partial settlement with the SEC last fall, the amount of fines was not determined. The two sides now are ready to face off about the fine in front of a judge in an April 19 hearing.

A source familiar with the matter said Putnam has admitted to 251 violations over four years. The SEC wants penalties per violation of either $550,000 or $600,000, depending on the date of the violation.

At the lower of those two levels, that would mean the SEC is seeking at least $138 million in penalties. Disgorgement would come on top of that in some undetermined amount.

A spokeswoman for Putnam said the company was prepared to pay a reasonable penalty.