Marsh & McLennan Investment Unit Fined

By Allison Bell

NU Online News Service, March 23,8:16 p.m. EST?Federal regulatorshave imposed a total of $40 million in fines on the moneymanagement unit of Marsh & McLennan Companies Inc. (MMC),officials said.[@@]

Another $20 million in fines were levied on a Citigroup Inc.investment operation.

The $40 million penalty was imposed on Putnam Investments, asubsidiary of New York-based MMC after the U.S. Securities andExchange Commission accused, the concern of using fund assets topay dozens of broker-dealers for "prime shelf space" from 2000 to2003 without disclosing that use of fund assets toshareholders.

The SEC accused Citigroup Global Markets Inc., a subsidiary ofCitigroup, New York, of giving certain mutual fund companies primeshelf space in exchange for payments from the fund companies thatwere not fully disclosed to customers.

Putnam agreed to pay the $40 million in fines to settle the SECcharges lodged against it. Neither Putnam nor Citigroup admitted ordenied the SEC findings.

Regulators at the SEC and state agencies began investigatingallegations of problems with the management of Putnam funds in2003.

Putnam already has agreed to pay $50 million in SEC fines inconnection with charges that loose supervision let speculators usePutnam funds to "time the market," or profit from delays in thespread of stock price information by rushing money in and out offunds.

The investigations of Putnam and separate investigations by NewYork State into alleged MMC insurance brokerage price fixing inexchange for insurance company kickbacks led to the departure ofthe company's former chairman and chief executive officer, JeffreyGreenberg, in October 2004.

The new settlement concludes the investigation into the shelfspace issue for Putnam, company spokeswoman Nancy Fisher said.

Fisher said Putnam cooperated with the SEC and has madeextensive changes in its fund management practices since 2003.

"Putnam remains committed to doing is right for its clients,"Ms. Fisher said.