ANCHORAGE - Putnam Investments' top executives traveled to Alaska to apologize to Alaska Permanent Fund trustees for what they called "ethical lapses" that have embroiled the firm in a trading scandal now sweeping the nation's mutual-fund industry.
The Boston-based money-management firm handles $520 million in stock investments for the permanent fund, the state's $26 billion oil-wealth savings account. Fund trustees summoned the Putnam managers to their meeting in Anchorage to explain what the firm has done to clean up past misdeeds.
"I want to apologize for the situation we're here to talk about today," said Sandra Whiston, Putnam's managing director.
Putnam is one of a growing stable of money-management firms that government regulators say were involved in improper trading. Regulators say portfolio managers engaged in market timing - rapidly buying and selling personal shares in mutual funds they managed. The practice can devalue the shares of all investors in a mutual fund.
Putnam executives on Thursday said the permanent fund's investment wasn't affected by the scandal. The permanent fund money is not invested in a Putnam mutual fund but is held in a separate account.
But the executives said the permanent fund trustees are rightly concerned that Putnam has its ethical house in order.
"On behalf of 5,300 folks who work at Putnam, I want to apologize for putting you in this difficult situation," said Ed Haldeman, the firm's new chief executive, addressing the trustees via teleconference from Boston. "There were certainly some ethical lapses at Putnam."
Haldeman said Putnam had taken steps to change the firm's culture and will more closely watch its managers.
Some permanent fund trustees, however, put some pointed questions to the Putnam people.
Eric Wohlforth, an Anchorage attorney and longtime trustee, questioned why tougher action wasn't taken against the six portfolio managers whose market timing was known by the company in 2000. He also said he was "distressed" by a recent New York Times story saying Lasser, the former chief executive, got a send-off compensation package worth $140 million.
"That's not a done deal even though it was reported in The New York Times that way," Haldeman said. "That payment has not been made," he said, and Putnam and its parent company are still reviewing it.
The Putnam executives promised to keep the trustees informed on the results of an ongoing internal review.
"I think we've done all we probably can," Wohlforth said after the hour-long Putnam presentation, though he noted the trustees have the option of dismissing Putnam any time they choose.
Since the scandal broke this fall, several institutional investors such as state pension funds have fired Putnam and shifted billions of dollars in investments to other management firms.