More On Legal & Compliancefrom The Advisor's Professional Library
- Pay-to-Play Rule Violating the pay-to-play rule can result in serious consequences, and RIAs should adopt robust policies and procedures to prevent and detect contributions made to influence the selection of the firm by a government entity.
- Using Solicitors to Attract Clients Rule 206(4)-3 under the Investment Advisors Act establishes requirements governing cash payments to solicitors. The rule permits payment of cash referral fees to individuals and companies recommending clients to an RIA, but requires four conditions are first satisfied.
Putnam Funds is participating in the U.S. Treasury's Money Market Guaranty Program, the company announced October 1. The program provides coverage to shareholders of Putnam's retail money market funds as of the close of business on September 19. The temporary guaranty will be triggered if a participating fund's net asset value falls below $0.995.
"We believe participation in the program is the right thing to do for shareholders who are understandably concerned about preserving their assets," says Putnam president and CEO Robert L. Reynolds.
According to Putnam, the Treasury Department program is expected to exist for an initial three-month term, after which the Secretary of the Treasury will review the need and terms for extending the program. While the program protects the accounts of investors, each money market fund makes the decision to sign up for the program.
A week earlier, Federated Investors and Putnam Investments said the Putnam Prime Money Market Fund had been liquidated on September 24, with shareholders receiving shares of Federated Prime Obligations Fund on a $1-per-share for $1-per-share basis. The Putnam Prime Money Market Fund then invested its assets in the Federated Prime Obligations Fund.
This news followed Putnam's September 18 announcement that the board of trustees of Putnam Funds, in response to market conditions, voted to close the institutional Putnam Prime Money Market Fund on September 17 and to liquidate it. As of September 22, the Federated Prime Obligations Fund was an AAAm-rated fund with $22.1 billion in assets, designed for use by fiduciaries and other institutional investors.
Putnam, based in Boston, says it had $160 billion in assets under management as of August 31, of which some $95 billion was in mutual funds for individual investors and about $65 billion was in institutional accounts.
Pittsburgh-based Federated had $335 billion in assets under management as of June 30, with close to 150 mutual funds.
Putnam, owned by Great West Lifeco and Power Financial Corporation of Canada, recently announced that Kevin Cronin, senior managing director and head of investments, resigned effective October 1, for personal reasons. He had been in the position since February 2005.
While a successor is being found, Putnam says, Cronin's team will report to Reynolds, who joined the company earlier this year after leaving his job as chief operating officer at Fidelity.
Janet Levaux, MBA/MA, is the managing editor of Research; reach her at email@example.com.