Putnam Investments

Introduction

Putnam Investments is a privately owned investment management firm founded in 1937 by George Putnam, who established one of the first balanced mutual funds, The George Putnam Fund of Boston. As one of the oldest mutual fund complexes in the United States. Lawrence Lasser was appointed as CEO of Putnam in 1986. The firm enjoyed high growth during the technology boom of 1990s. In 2002 Putnam started noticing losses because of bursting of internet bubble and poor investment performance, Lasser hired Ed Haldeman in October 2002 as co-head of Investment to deal with legging investment performance.

Ed Haldeman was CEO of Delaware Investments before joining the Putnam, and he significantly improved the investment performance of Delaware

In my opinion the reason behind the unethical trading was the structure and culture of Putnam under Lawrence leadership and Haldeman completely understood this fact and decided to change the whole organization structure.

Problem with the organization’s structure and culture under Lasser’s administration

• Governance or power distribution

Under Lasser leadership, although there was a “partner group” for the governance but power was not distributed equally and Lasser used to hold almost all rights to govern the organization.

• Legal and compliance

The legal department of Putnam did not report directly to CEO, it seems legal system used to avoid unethical trading practices in Putnam. And there was no unified compliance department instead it was distributed among other departments and it led to a weak ethical culture.

• Human

The firm had hierarchical structure, which restricted the innovation and promoted the conservatism in the organization. All the employees were not treated equally and had different privileges based on their rank and position. For Example Lassar office was tightly controlled including access to the executive dining room, only senior executives were allowed to have lunch daily at executive dining room but junior executive had this privilege only for few days a week.There were very little transparency and open communication under Lassar leadership, only top managers were allowed to attend the quarterly meeting and Lassar knew in advance, whom he would speak and what they would say to him, it seems a dictatorial work culture to