The U.S. Securities and Exchange Commission today announced that it has settled charges against a couple of former Putnam Investments’ portfolio managers.

The final judgment by consent was entered by the U.S. District Court of the District of Massachusetts against Justin Scott and Omid Kamshad, two former managing directors and portfolio managers at Putnam. The final judgments permanently enjoin them from violating antifraud provisions of the Investment Advisers Act, require them to disgorge their ill-gotten gain, plus prejudgment interest, and order them each to pay a US$400,000 civil penalty. Scott and Kamshad have also consented to entry of an order suspending them from association with an investment adviser for one year.

The commission’s complaint, filed Oct. 28, 2003, alleged that Scott and Kamshad engaged in inappropriate trading of Putnam mutual funds’ shares, including in funds over which they had investment authority. The commission charged that the trades, which were made in their Putnam-administered deferred compensation and retirement accounts, violated their responsibilities to other fund shareholders, that Scott and Kamshad failed to disclose their trading and that, by their trading, they potentially harmed other fund shareholders.

To settle the charges, Scott consented, without admitting or denying the allegations of the complaint, to the entry of a final judgment, including an order to pay disgorgement of ill-gotten gain in the amount of US$489,439, plus prejudgment interest in the amount of US$159,475. The judgment also orders Scott to pay a civil penalty in the amount of US$400,000. The judgment provides that half of Scott’s total liability of US$1,048,914 may be offset by payments made to settle a related action brought by the Secretary of State of the Commonwealth of Massachusetts.

Kamshad similarly consented, without admitting or denying the allegations of the complaint, to the entry of a final judgment, including disgorgement of US$57,157, plus prejudgment interest of US$13,709, and a civil penalty in of US$400,000. The judgment also provides that half of Kamshad’s total liability may be offset by payments to settle a related action.