Putnam Investments’ top lawyer, who knew about improper trades at the firm before regulators began probing it, will leave the troubled asset manager later this month, the company said on Monday. Putnam’s board of trustees found last month that Putnam’s general counsel, William Woolverton, along with former Chief Executive Lawrence Lasser and another top executive, had known that market timing had been taking place in the firm’s funds since 2000. Putnam has faced several regulatory and legal problems since last autumn. It was the first mutual fund company to be sued for improper trading in what has become a sweeping probe of the $7.6 trillion industry. Lasser and former chief investment strategist Tim Ferguson left the firm after Putnam portfolio managers were accused of timing their own funds. The company also was accused of allowing others, such as a boilermakers’ trade union, to engage in the practice, too. The company also fired 15 employees who had a part in the improper trades. Investors reacted badly to the accusations against the then No. 5 mutual fund company and pulled out about $54 billion in assets in the last three months of 2003 alone.
Putnam settled a civil fraud complaint with the U.S. Securities and Exchange Commission in November, but not with Massachusetts’ top securities regulator William Galvin. Galvin’s probe into Putnam, a unit of insurance broker Marsh & McLennan, continues. Last week, Galvin said that Putnam may have used distribution and marketing fees known as “12b-1 fees” to pay rebates to preferred customers, which would constitute a breach of fiduciary duties and possible additional charges. Those fees get their name from SEC Rule 12b-1, which lets a mutual fund, under specific circumstances, use fund assets to pay for distribution expenses. As of March 31, Putnam managed $227 billion in assets.