The Markets September 24, 2008

SEC Announces Compensation for Franklin-Templeton Investors

The Securities and Exchange Commission (SEC) has announced a Fair Fund distribution of approximately $49 million to investors affected by improper market timing in mutual funds managed by Franklin Advisers, Inc. of the Franklin-Templeton Investments complex.
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According to an SEC announcement, the remainder of the Fair Fund, approximately $5.7 million, including earned interest, is scheduled to be distributed next month.

In 2004, the SEC brought settled administrative and cease-and-desist proceedings charging Franklin with improperly allowing market timing in mutual funds it managed from 1996 to 2001. The SEC’s order required Franklin to pay a total of $50 million in disgorgement and penalties and undertake certain compliance reforms. Franklin consented to the order without admitting or denying the findings, the announcement said.

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The Fair Fund Administrator responsible for distribution is Boston Financial Data Services, Inc. (BFDS). Investor questions regarding the distribution may be directed to BFDS at (866) 700-0131.

Information regarding the distribution can also be obtained at the Franklin-Templeton Web site.

Deals & People September 24, 2008

Putnam Money Market Fund Clients to Become Federated Shareholders

Federated Investors, Inc. and Putnam Investments announced that, upon liquidation, the institutional Putnam Prime Money Market Fund will invest its assets in the Federated Prime Obligations Fund in an in-kind purchase transaction.
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The companies said the $12.3 billion Putnam Prime Money Market Fund was liquidated after 5 p.m. Wednesday and its institutional shareholders received shares of Federated Prime Obligations Fund on a $1-per-share for $1-per-share basis.

Federated Prime Obligations Fund, which had $22.1 billion in assets as of September 22, 2008, “is designed for use by fiduciaries and other institutional investors who have rigorous requirements for safety and daily liquidity at par,’ a press release noted.

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This action follows Putnam’s September 18, 2008 announcement that the Board of Trustees of the Putnam Funds, in response to market conditions, had voted to close the Putnam Prime Money Market Fund, effective 5:00 p.m. on September 17, 2008 and to liquidate the fund (See Market Turmoil Sparks Putnam Fund Shuttering).

Shareholders of Putnam Prime Money Market Fund will be entitled to dividends through September 24, 2008, the announcement said. The accumulated, but unpaid, dividends will be paid on September 25, 2008 by Putnam. Such shareholders will be entitled to dividends from Federated Prime Obligations Fund beginning September 25, 2008.

“We believe this transaction with Federated is very beneficial to the shareholders of the Putnam Prime Money Market Fund,’ said Robert L. Reynolds, Putnam president and chief executive officer, in the release. “First, we wanted to be fair and equitable to all shareholders, which is why we closed the fund. Second, in liquidation, we were looking for the best solution possible. The transaction with Federated accomplishes this objective.’

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