To get closure on the case, Putnam will pay $110 million, split evenly between the SEC and Massachusetts regulators. The SEC's portion will go to helping shareholders, while the Massachusetts money goes into that state's general fund.

The SEC found that, beginning as early as 1998, at least six Putnam investment management professionals engaged in excessive short-term trading of Putnam mutual funds in their personal accounts. Four of those employees engaged in timed trading in funds over which they had investment decision-making responsibility. Although Putnam became aware in 2000 that several investment management employees were engaging in potentially self-dealing short-term trading of mutual fund shares, the company failed to disclose this potentially self-dealing securities trading to the boards of the mutual funds it managed and the funds' shareholders. A November 13, 2004, SEC order censured Putnam and ordered it to cease and desist from violations of the antifraud provisions of the Investment Advisers Act of 1940 and other provisions of the federal securities laws.

Stephen M. Cutler, Director of the SEC Division of Enforcement, said, "The significant monetary sanctions we announce today complete the settlement process initiated last November when we imposed far-reaching governance and compliance reforms designed to protect Putnam's mutual fund shareholders. Putnam's $55 million payment — all of which will be placed in a restitution fund for the benefit of investors — makes clear that self-dealing by mutual fund managers will be severely punished. More generally, this case demonstrates the Commission's continuing commitment to investor protection in its enforcement efforts through a combination of tough monetary sanctions, forward-looking structural relief and victim restitution."

The SEC order calls for the appointment of an Independent Distribution Consultant who is charged with developing a plan for distributing the $55 million in disgorgement and penalties to harmed investors. The $55 million will be distributed to investors in order of priority: first, as compensation to investors for losses attributable to excessive short-term trading and market timing trading activity by Putnam employees and, second, as compensation for advisory fees paid by mutual fund clients who suffered such losses.

The Commission's previously filed civil injunctive action charging two Putnam employees, portfolio managers Justin M. Scott and Omid Kamshad, with securities fraud for engaging in excessive short-term trading of Putnam funds in their personal accounts, is pending.

The SEC investigation is continuing.