Administration May 7, 2005

Putnam Whistleblower Sues for Rewards

July 5, 2005 (PLANSPONSOR.com) - The man who helped blow the whistle on improper trading at Putnam Investments has taken his battle for a share of the money recovered from Putnam into court.
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Peter Scannell, who alerted Massachusetts regulators to the fund trading practices at Boston-based Putnam, sued the state and its attorney general after officials last month turned down his demand for the money under the whistleblower law, according to a Reuters report. Scannell sought $15 million or 30% of the fines that Putnam paid to the state, which his lawyer, Robert Autieri, argued that he qualifies for under the Bay State’s five-year-old whistleblower statute.

Massachusetts Attorney General Tom Reilly’s office said Scannell, a former Putnam call center employee, played an important role in the case but that he does not qualify for the award under the law.

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Putnam, the first big mutual fund firm to be charged in an industrywide scandal that cost it billions of dollars in lost assets, agreed to pay $193 million in fines to state and federal regulators and in restitution to investors hurt by the trades (See  Putnam Trustees Approve Outside Study Putting Market Timing Damages at $108.5M ).  Putnam is a unit of insurance broker Marsh & McLennan Cos.

Benefits May 6, 2005

Alaska Pension Reform Measure Hits Legislative Snag

May 6, 2005 (PLANSPONSOR.com) - The Alaska state House of Representatives turned their thumbs down to a key measure overhauling the state's pension plans as part of a continuing controversy that has developed into the most contentious issue of the current lawmaking session.
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The late night vote against the bill – with 23 members against and 17 in favor – will throw a major hitch into the fate of other legislation and funding that the Senate GOP has connected to the retirement overhaul if the House move isn’t overturned on reconsideration, according to a news report in the Fairbanks News Miner.

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The bill proposes switching incoming employees in the Public Employees Retirement and Teachers’ Retirement Systems from a traditional pension plan to a 401(k) plan.

According to the news report, Senate Republicans have been pressuring the House to pass the overhaul bill by not forwarding the hefty capital budget under consideration until the retirement legislation is passed and leveraging other bills against the measure. Earlier in the session, the Senate GOP made $38 million of education funding dependent on passage of the individual investment accounts provision in SB 141. The bill has already passed the Senate.

The motion to have a reconsideration vote was made by Representative Mike Kelly, (R-Fairbanks), a staunch supporter of the bill and its proposed conversion to the 401(k)-like defined contribution plans for new hires. The reconsideration could take place as soon as Friday.

The debate before Thursday’s vote pitted representatives who said the Legislature must prevent the PERS and TRS from falling further into debt against those who countered that the bill’s changes would leave future teachers and public employees with uncertainty about whether they’ll have enough money to live during retirement.

The PERS and TRS face a projected long-term debt of about $5.7 billion, and employers, such as school districts and municipalities, have been required to pay more into the system every year because of the projected shortfall.

The reform measure has also hit other legislative bumps in the road along the way (See Little Known Statute Delays Alaska Pension Reform Bill ).

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