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Florida loyal to Putnam for now

Some big public pension funds quickly pulled the plug on Putnam Investments when the company was implicated in the mutual fund trading scandal, but Florida is taking the cautious approach.

The Florida State Board of Administration, which runs the public employees' pension fund, put Putnam on its "manager watch list" and it could could take 90 days to decide whether to fire the company.

Funds in New York, Pennsylvania, Rhode Island and Iowa pulled their money out almost immediately after securities regulators sued the mutual fund company and two of its managers for securities fraud. Putnam's chief executive, Lawrence Lasser, resigned under pressure Monday.

But Coleman Stipanovich, executive director of the Florida board, said acting too quickly could prove a mistake.

"We're very troubled by this, but we don't have as much information as we need at this point," he said. "Moving a billion dollars is expensive. There's a cost there for transactions, and then you've got to know what to do with that money. If you're not putting it in the right place, then it becomes a performance issue."

Putnam managers invest more than $1-billion in international stocks for the $95-billion Florida fund. Because all pension fund money is held in separate accounts, the fund is not affected by investors trading in and out of mutual funds. That type of trading by favored investors can hurt long-term shareholders. Regulators say some fund companies, including Putnam, permitted such "market timing" at shareholder expense even when they told shareholders it was forbidden.

State and local government employees who participate in the state's new defined contribution retirement plan do have mutual funds among their choices, including one from Putnam. However, the $2.5-million in state employees' money in that fund did not get invested until the end of July 2002, after the incidents of market timing cited by regulators. Employees are free to change their investment choices.

Stipanovich said one reason for taking things slowly is that regulators are still collecting information and could file charges against other money managers.

"It's going to go well beyond Putnam, but I don't know how pervasive it's going to be," he said. "We're contacting all our money managers, trying to see if there have been any of these activities with them, but in some cases, the answers are so vague, they're not even sure."

He said the board will be watching closely to see if Putnam's problems have an impact on its managers' performance.

_ Helen Huntley can be reached at or (727) 893-8230.