State retirement system suspends Putnam

Wednesday, Nov. 5, 2003 | 11:29 a.m.

CARSON CITY -- The state Public Employees Retirement System has suspended the authority of Putnam Investments to make any more investments in a portfolio of more than $400 million after the company was accused with mutual fund trading irregularities.

"As soon as the allegations became public, we halted their trading authority in the portfolio," said Laura Wallace, deputy director in charge of investments for the retirement system.

The retirement system has $424 million invested with Putnam. She said the allegations have not affected the value of the fund.

But Wallace said the public employees retirement board will meet Nov. 12 and she will recommend the contract with Putnam be terminated. The delay, she said, was due in part to notice requirements of the open-meeting law.

Meanwhile state Treasurer Brian Krolicki said today he "is comfortable all our funds are secure" in the portion of the College Saving Plan handled by Strong Financial Corp., another firm facing charges.

Nevada has $400 million in all of its college savings funds, but only $6 million is handled by Strong Financial.

"We need to approach this with caution," Krolicki said. He said the College Savings Board meets Friday and will discuss the issue and look at other options. He said Strong Financial is audited regularly by a certified public accounting firm hired by his office.

Wallace said today she acted before 8 a.m. on Oct. 24, when the allegations surfaced about Putnam that was accused by regulators of civil securities fraud. Two of the portfolio managers are accused of having market-timed their own funds. Putnam told them to stop, but didn't fire them. The allegations are these managers kept making their profits.

Wallace said one of the men had a relationship with the management team that handles the Nevada investment.