Arkansas teachers eye mutual fund fraud charges

(November 4, 2003) — (Little Rock-AP) -- Directors of the state's largest retirement system plan to meet today to consider whether to follow other states in bailing out of investments with a mutual fund company accused of defrauding investors. The Arkansas Teacher Retirement System has more than 450 million dollars invested with Putnam Investments. In all, the retirement system has assets of seven billion dollars. Putnam is accused of defrauding investors by allowing some customers and money managers to trade rapidly in and out of mutual funds. The practice is not illegal, but the Securities Exchange Commission and Massachusetts regulators allege Putnam acted fraudulently by failing to enforce company policies discouraging it. Last week, public pension funds in Iowa, Massachusetts, New York, Pennsylvania, Rhode Island, and Vermont pulled more than four billion dollars from Putnam.