Putnam targeted in probe of mutual fund trading

BOSTON – Massachusetts securities regulators plan to charge Putnam Investments with civil securities fraud as part of an investigation into alleged improper “market timing” practices in the trading of mutual funds, according to a published report.

The Boston Globe, citing two sources familiar with the matter, reported Tuesday that within a matter of days Putnam will face one allegation of allowing individuals to trade quickly in and out of mutual-fund accounts in violation of company policies. The second count would accuse the company of failing to treat shareholders equally by allowing some to participate in market-timing.

The state would argue that both constitute civil fraud under Massachusetts law, the sources said. The practice of market timing is not illegal, but many companies, including Putnam, strongly discourage it.

Separately, Putnam runs two work-at-home projects out of base operations at Husson College in Bangor and Thomas College in Waterville. The investment firm employs more than 100 nonstudent workers throughout the state, and another 40 students at Husson.

The work-at-home employees manage mutual funds and 401(k) accounts but do not sell them or dispense any financial advice, according to company officials. They set up accounts, transfer money between funds, and answer shareholders’ questions about their records. The company also has management and systems operations positions in Bangor.