Putnam’s Reforms Allow It to Seek State Contracts

Money manager Putnam Investments, fired last year by California’s top pension funds for allowing improper trading in mutual funds, on Thursday won the right to again compete for state contracts after agreeing to disclose more information about its fees and fund manager pay.

Putnam, a Boston-based unit of Marsh & McLennan Cos., was the first fund manager charged with wrongdoing in the abusive-trading scandal that has rocked the industry over the last year.

The California Public Employees’ Retirement System and the California State Teachers’ Retirement System pulled $1.5 billion in stock assets from Putnam after the firm was charged.

On Thursday, fund officials and state Treasurer Phil Angelides, who sits on both funds’ boards, said Putnam had agreed to reforms that would put it back in the state’s good graces.

Putnam pledged to reveal the aggregate pay of its teams of fund portfolio managers, show the commissions paid to the five largest brokerages that execute stock and bond trades on behalf of its funds, and conduct a study of proxy voting policies on executive compensation issues.

The Securities and Exchange Commission voted in August to require fund companies to tell investors how managers were compensated but didn’t obligate them to reveal specific pay levels.

Angelides said he hoped Putnam’s additional disclosures would create a new standard for the fund industry, which has been criticized for keeping investors in the dark about certain aspects of its operations.

Investors have pulled $63 billion in assets from Putnam over the last year -- about a quarter of its total assets -- since the firm’s involvement in the trading scandal became public.