US Public Funds To Use SEC Rule To Put Their Candidate On the Putnam Board

Four major US public pension funds have told the parent company of beleaguered mutual fund group Putnam Investments that they will nominate their own candidate for the company's board, in line with the post Enron rule proposed by the Securities

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Four major US public pension funds have told the parent company of beleaguered mutual fund group Putnam Investments that they will nominate their own candidate for the company’s board, in line with the post-Enron rule proposed by the Securities and Exchange Commission (SEC). The resolution was filed last week with insurance broker Marsh & McLennan, which owns Putnam.

“Marsh & McLennan deserves to be the first company in US history to face a binding proxy access proposal because of its gross failure to have proper controls that could have prevented the Putnam disaster,” said Gerald McEntee, chairman of the American Federation of State, County and Muncipal Employees.

The resolution was filed by the AFSCME Employees Pension Plan, the New York State Common Fund, the California Public Employees’ Retirement System and the California State Teachers’ Retirement System. Between them, the pension funds hold 1.3 percent of Marsh & McLennan.

Federal and state regulators have accused Putnam of securities fraud. The charges allege abusive market timing, or churning mutual fund units to profit from stale prices in violation of fund rules. Putnam has attempted to put the scandal behind it by settling charges with the SEC.

The SEC rule is designed to give investors the opportunity to nominate members of the boards of directors of companies, because shareholders’ proposals and nominations are routinely excluded from proxy voting. The rule has yet to be promulgated.

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