Two former fund managers at Putnam, who were sued by the US market regulator in 2003 over a mutual fund scandal, have settled out of court for a combined $1.5m (€1.1m).
Bloomberg reports Justin Scott agreed to forfeit $1.05m in profits and fines, while former colleague Omid Kamshad agreed to pay $471,000 to settle the claims.
The pair, both managing directors at Putnam in 2003, were sued by the Securities & Exchange Commission and Bill Galvin, secretary of the Commonwealth of Massachusetts, for trading mutual funds illegally.
According to documents filed, they moved money around the various funds in round trades, taking advantage of sophisticated arbitrage opportunities and inside information.
Our take on this news: Why aren't these two individuals in jail? Is doing something illegal criminal anymore? The only way to stop corruption on Wall Street is to jail them for their illegal activities. The fines they can afford, jail time is something they need to have for punishment.
The case led to massive client withdrawals from Putnam, amounting to over $50bn. The company agreed in 2004 to pay $110m to settle related claims that it failed to report the wrongdoing.
Putnam was sold in January to Canadian insurer Power Financial for $3.9bn.
Kamshad and Scott neither admitted nor denied any wrongdoing under the agreement, the newswire said, and as a condition they are barred from working with an investment adviser for one year.
Last July, Kamshad was hired as a researcher by hedge fund group Grosvenor Street Capital. It is unclear what effect the settlement will have on his employment.
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