Top Dog responds to Haldeman article

One of Putnam Investments’ Top-Dogs has already responded to yesterday’s allegations published in the Review against Chair Ed Haldeman, who is Putnam’s CEO. Roland Adams, Director of Media Relations at Dartmouth’s Public Affairs Office, asked me if I would post this letter (below) on Dartlog “in full and unedited [form] to provide a timely and complete response?” Certainly. This letter was sent to Dartmouth’s Public Affairs Office, and not to The Dartmouth Review, though it is addressed to the Review. After the jump.

The letter was written by one of Putnam’s leading lawyers, James Carroll of the law firm Skadden, Arps, Slate, Meagher & Flom. This is the firm representing Putnam in the class action suit being brought against them in the U.S. District Court in Maryland.

Skadden, Arps, Slate, Meagher & Flom LLP
One Beacon Street
Boston, Massachusetts

April 22, 2008

Ms. Emily Esfahani-Smith
Editor in Chief
The Dartmouth Review
P.O. Box 343 Hanover, NH 03755

Dear Ms. Esfahani-Smith:

I write in response to the Dartmouth Review’s April 21 article concerning Ed Haldeman, the CEO of Putnam Investments. As Putnam’s outside counsel, I have worked closely with Putnam’s former and current management on market timing issues since 2003. In doing so, I have come to know Ed Haldeman as a man of extraordinary integrity and character. Ed stepped into the CEO role at Putnam during its most challenging hour and put it on a path to health and stability. Although I will not address each of the many inaccuracies in the article, I would like to make the following points:

· Market timing issues at Putnam were exhaustively investigated by the SEC and the Massachusetts Securities Division, as well as the Audit Committee of the Board of Trustees of the Putnam Mutual Funds. The Trustees of the Putnam Funds are independent from Putnam Investments and were assisted by preeminent counsel.

· These investigations included reviews of hundreds of thousands of pages of documents and interviews and sworn testimony of many dozens of witnesses, including Mr. Peter Scannell, the apparent source for the Review’s April 21 story.

· In the course of these investigations, there has never been any indication that Ed Haldeman was aware of alleged market timing improprieties before they came to light in the fall of 2003. In fact, just the opposite is true. Indeed, when I personally interviewed Mr. Scannell he never said anything to the effect that Mr. Haldeman was aware of market timing problems at Putnam. Of course not: Mr. Scannell was a relatively low level employee in a remote Putnam call center who responded to calls from 401k plan participants. He had no access to any information about the trading by portfolio managers nor would he have had any information about what Ed Haldeman knew or did not know.

· Ed arrived at Putnam in the fall of 2002, and only learned of alleged market timing improprieties in September, 2003, after those issues surfaced in connection with regulatory inquiries at Putnam and other firms in the mutual fund industry.

· Ed was named as the new CEO by Putnam’s parent company because he was the right person to address and resolve market timing issues at Putnam and because he was a leader who could restore Putnam’s reputation as a world-class investment management firm.

· After becoming CEO, Ed indeed took strong actions, including personnel changes, settlements with the appropriate regulatory authorities, implementation of industry-leading compliance procedures and shareholder disclosures, and, most importantly, aggressive action to fully reimburse Putnam’s mutual fund shareholders for any damages that they may have incurred as a result of market timing improprieties. I have watched with great admiration as Ed has spent his four-and-one-half years as CEO relentlessly promoting a culture at Putnam that is built on uncompromising ethics and a “shareholder-first” value system. He enjoys the enthusiastic support not just of his colleagues and employees, but also of an entire industry. Ed’s principled leadership and values are largely responsible for the restoration of Putnam’s good name.

Very truly yours,

James R. Carroll

UPDATE: Trustee T.J. Rodger’s wrote to the Daily D, also defending Haldeman against the whistleblower’s accusations. —A.S.