An Ohio trust authority that offers tax-deferred college savings plans was named lead plaintiff in a lawsuit against Putnam Investments to recover money it says was lost when former Putnam employees engaged in trading that enriched themselves at others' expense, state officials said.
Ohio Attorney General Jim Petro said on Thursday that clients of the Ohio Tuition Trust Authority were damaged when Putnam allowed some customers to engage in market timing, which is at the center of a scandal over improper fund trading.
Favored customers engaged in market timing -- the frequent movement in and out of funds that can be detrimental to long-term investors -- and violated Putnam's policies, Petro said in a statement.
Petro said that as lead plaintiff in the class action lawsuit that has been consolidated in a U.S. District Court in Baltimore, the trust can have a great impact on the course of litigation. He said Ohio will seek a fair resolution.
The Ohio trust signed a contract with Putnam Investments in July 2000, officials said. As of the filing of the class action suit in October, the trust had clients with more than $2.8 billion invested in various Putnam mutual funds, they said.
The trust authority plans to quantify the amount of damages during the course of litigation, officials said.
Ohio has appointed class action specialist firm Milberg Weiss Bershad & Schulman LLP and Colley Shroyer & Abraham Co. of Columbus, Ohio, to represent the trust.
