Securities Law Prof Blog

Editor: Eric C. Chaffee
Univ. of Toledo College of Law

Monday, February 16, 2009

First Circuit Affirms Dismissal of Fraud Charges Against Three Former Employees of Putnam Fiduciary Trust

The SEC recently announced that on February 6, 2009, the United States Court of Appeals for the First Circuit affirmed a federal district court decision dismissing a civil fraud action against three former executives of Putnam Fiduciary Trust Company (PFTC), a Boston-based registered transfer agent. The action, filed in December 2005, alleges that six former PFTC executives engaged in a scheme beginning in January 2001 by which the defendants defrauded a defined contribution plan client and group of Putnam mutual funds of approximately $4 million. On March 6, 2007, the district court issued a ruling dismissing the Commission's case against three of the six defendants: Virginia Papa, a former managing director and director of defined contribution servicing; Sandra Childs, a former managing director who had overall responsibility for PFTC's compliance department; and Kevin Crain, a managing director who had responsibility for PFTC's plan administration unit. Judgments by consent were entered in October 2008 against two of the three remaining defendants. The case against the remaining defendant, Donald McCracken, of Melrose, Massachusetts, a former managing director and head of global operations services for PFTC, is pending.

The Commission's Complaint alleges that through their conduct, all defendants violated Section 17(a) of the Securities Act of 1933 and violated and/or aided and abetted violations of Section 10(b) of the Securities Exchange Act of 1934 and one defendant violated Sections 34(b) and 37 of the Investment Company Act of 1940. The Commission is seeking injunctive relief and civil monetary penalties against the remaining defendant.

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