A nationwide investment scandal prompted Riverside County officials to pull $10 million in retirement money out of mutual-fund giant Putnam Investments, county officials announced Thursday.
The county will choose a new family of funds for roughly 700 county employees who have investments with the company. The employees will be told what their investment options will be in the coming weeks.
“We feel strongly that Wall Street has to clean up its act,” said Riverside County Treasurer Paul McDonnell.
Putnam officials could not be reached for comment.
County employees will have their money transferred to comparable investments in a new family of funds or can reallocate funds when a new investment group is chosen, McDonnell said by telephone.
Last month, mutual-fund managers for Putnam and other investment companies were caught manipulating fund investments for personal gain by Massachusetts regulators and the Securities and Exchange Commission.
Investment managers at Putnam, Janus Capital Group, FleetBoston Financial Corp. and Pilgrim Baxter & Associates have been named in an investment trading scandal that has sent the county searching for a new investment group.
The county took action because members of the county’s committee that oversees investments have a legal and fiduciary responsibility to its employees.
“It’s a smart move,” said San Bernardino County Treasurer Dick Larson. That county does not have investments with Putnam, Larson said by telephone.
Public and private investors have pulled $22 billion in assets from Boston-based Putnam. The California Public Employees’ Retirement System, CalPERS, on Monday divested $1.2billion from Putnam. On Wednesday, Oregon officials pulled $500 million in state pension funds from the company.
Before the scandal, the company had $277 million under management, according to its Web site.
The investment scandal not only has investors pulling their money out of Putnam, but also suing.
The $10 million with Putnam represents about 10 percent of the total money invested by county employees in programs similar to a 401k.
“Our employees shouldn’t have to suffer financially because of the alleged unscrupulous actions of Putnam and we’re doing everything in our power to keep them from being harmed,” said Riverside County Supervisor John Tavaglione in a prepared statement.