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free ball-game tickets are unethical, fund says

June 2004

The US mutual fund company Putnam Investments, which is to pay a $110million (£60m) fine to settle US federal and state claims of improper trading, is to bring in new rules for staff in an effort to distinguish between the occasional acceptable free lunch and unacceptable business invitations.

Putnam staffers will have to abandon the common practice in the US mutual fund industry of accepting invitations to sports events or freebies to exotic places. The new rules say: ‘No Putnam employee can accept anything of material value from any broker-dealer, financial institution, corporation or other entity, any existing or prospective supplier [or] any company … whose securities are held in or are being considered as investments for the Putnam funds, or any other client accounts.’

The limit for gifts is set at $100 a year from any one source. Attendance at entertainment events is restricted to ‘the metropolitan area in which the office of the employee is located’, and the presence of ‘spouses or other family members of the employee’ is forbidden. Attending ‘sporting events or play-off games’ is now officially banned. Putnam Investments, the sixth biggest US mutual fund, is the mutual fund arm of financial services group Marsh McLennan.

The guidelines, released only days before the settlement, were written by the Putnam management after several scandals and charges imposed by US regulators on mutual fund companies. Other companies that have paid such fines include New York-based Alliance and MFS Investment Management, which is a subsidiary of Canada’s Sun Life Financial.




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