Human Capital & Careers

Four Resign over Putnam 401(k) Error

With money managers holding on to its money in a rising market, a retirement plan lost $1.5 million.
Stephen TaubMarch 9, 2004

Putnam Investments, the embattled money-management giant, asked four employees, including one senior executive, to resign for not correcting an accounting error that cost a company’s retirement plan $1.5 million, according to USA Today.

Putnam failed to immediately invest the entire $1 billion in assets that the company’s 401(k) plan brought to Putnam to administer, Putnam CEO Charles Haldeman said in an interview with the paper. The plan lost $1.5 million because it was unable to profit from a rise in the stock market.

The investment company notified the plan two weeks ago about the 2001 incident, the paper said. The employees responsible for the error reportedly did not notify the plan or the mutual fund trustees. “They knew what the proper procedure was, but elected not to follow it,” Haldeman told USA Today.

The problem, limited to one 401(k) plan, was unearthed during a Putnam internal review of its compliance procedures, according to the newspaper.

The money management giant said it plans to reimburse the 401(k) plan. Among those leaving the company was Karnig Durgarian, chief of operations for 401(k) plan record-keeping.

Putnam, of course, is one of the money-management firms embroiled in the ongoing mutual fund scandal. Last November, it settled a case brought by the Securities and Exchange Commission charging Putnam with failing to disclose self-promoting trading practices by some employees and failing to take proper measures to uncover and deter the activities.

The company faces similar civil charges from Massachusetts Secretary of State William Galvin.