Putnam Investments was fired by the
Rhode Island state pension fund from managing $651 million of
international stocks, the Associated Press reported.
The firing comes three days after the Boston-based money
manager was charged by state and federal regulators with
securities fraud related to frequent mutual fund trading.
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Rhode Island is the third state to terminate Putnam this
week, following Massachusetts and Vermont.
Putnam spokeswoman Nancy Fisher didn’t immediately return
telephone calls seeking comment.
Rhode Island will put the
$651 million it had invested with Putnam Investments into an
index fund and will immediately ask for proposals from a new firm
to manage its state pension fund, General Treasurer Paul Tavares
told CNBC.
“We’re going to invest it short term in an index fund and
we will immediately commence with a request for proposals for a
new firm,” Tavares told CNBC. “We hope to reallocate this money
quickly in the designation that we wanted and continue to earn
for our retirees the way we have.”
The state may consider rehiring Putnam if it shows it can
put in place policies and procedures to prevent the practices
that led to state and federal regulators charging the firm with
securities fraud, Tavares told CNBC.
“We already had concerns about performance in our portfolio
and ultimately when they terminated people that were key members
of our investment team, that shook our confidence in the entire
firm,” Tavares said on CNBC. “So it was prudent that we make
this move at this time,” he said.
Bloomberg News
