Shenanigans at Putnam Investments

[Lakewood90712]

Mom has some shares in a Putnam Fund. This is one that was a direct purchase, not thru a broker dealer. She always tosses the proxy vote stuff, has no interest in the votes.

This time something stinky is happening. Got a call on her phone, after my probing it was from " Computershare" The firm that processes share voting for almost all mutual funds and stocks. Ok, I am convinced this is not a scam call.

This is a vote on a proposal to give the directors voting power for share owners, again, not unusual.

Here is the rub:

First time I have ever herd of, in 35 years of owning stocks and funds, A fund management company is having the vote tabulation company calling share owners. And just who is paying for this special personal call ? The shareowners ?.

This smells bad, Next call is to Putnam Legal dept. If they don't want to talk, It's off to a formal FINRA complaint.

Putnam has gotten into legal trouble before, as have many of the mutual fund companies. I guess over time, they forget lessons learned.

Stay Tuned.............

[pb4uski]

Ready. Fire. Aim.

It might be best to ascertain the facts before making accusations. Just sayin.

[MichaelB]

Quote:

Originally Posted by Lakewood90712 First time I have ever herd of, in 35 years of owning stocks and funds, A fund management company is having the vote tabulation company calling share owners. And just who is paying for this special personal call ? The shareowners ?.

This happened to us regularly when we owned shares of mutual funds directly with the fund company and not through Vanguard. Dodge and Cox did it more than any other. If not enough shares vote they need to reschedule the proxy and vote again, and that adds costs to fund holders.

[bingybear]

I remember some time ago getting hounded to vote my shares for a MF (not Putnam). I forget the fund or what the vote was for, but they needed more than a certain % of out standing shares voting or they would have to do the vote all over again. And doing a vote with all the mailing and compliance issues.

Check the reason for their wanting votes. If the fund has to do another vote, the fund usually would pay for it... additional fund expenses.

[audreyh1]

I’ve been called before by a mutual fund company about voting on a proxy. This happens when they don’t have enough votes. Been a while, but it used to happen all the time. And these were MFs held through a brokerage.

Never had a Putnam MF.

Yes, I’m sure the costs add to the expenses of the fund, but mutual funds are legally required to get enough votes on proxies. It’s part of the structure.

[Helen]

Quote:

Originally Posted by pb4uski Ready. Fire. Aim. It might be best to ascertain the facts before making accusations. Just sayin.

I think this is a perfect forum for a post like this. The OP has received some good information in the responses. I learned some things I didn't know.

[MichaelB]

The reason this doesn’t happen with stocks but does with funds, is so much stock is owned by institutional investors, such as insurers and pension funds, when they vote the proxy minimums are met. OTOH, most mutual funds are owned by individuals, so many more votes are needed for a proxy to get the 50% of shares.

[COcheesehead]

So is the lesson here vote your proxy so they don’t have to engage third parties?

[MichaelB]

Quote:

Originally Posted by COcheesehead So is the lesson here vote your proxy so they don’t have to engage third parties?

Yes! Said a little differently, vote your proxy so they don’t spend your money calling you asking for your vote.

[pb4uski]

Quote:

Originally Posted by Helen I think this is a perfect forum for a post like this. The OP has received some good information in the responses. I learned some things I didn't know.

I don't disagree at all.... if the OP had been framed as a question rather than an accusation of "shenagians" then I would have had no objection and the other posts would have been the same.... explaining.

[MichaelB]

Quote:

Originally Posted by pb4uski I don't disagree at all.... if the OP had been framed as a question rather than an accusation of "shenagians" then I would have had no objection and the other posts would have been the same.... explaining.

Don't be so harsh. The first time I got called I had a similar reaction, especially when the proxy agent said "if you want, you can just tell us your vote right now over the phone, we'll record it for you". That seemed wrong, I wrote a letter to the fund company (Dodge and Cox). They had one of the analysts call (we have the same last name, which is not common, so we had to be related) and she patiently explained to me all these same things. The parts that got my attention were all the money being spent, and that it didn't come from the fund mananger's cut, it came from mine.

[OldShooter]

Here is the way I would analyze it:

1) Shareholders usually vote with management.

2) Therefore all we have to do is to solicit proxies; we don't have to worry about how they will be voted. So we can just pay Computershare to ask for proxies.

4) We are proposing something that is important to us, so we need to have a certain number of proxies (50%?) in our favor so we can push it through.

Now very slight bit of deductive reasoning:

5) We are proposing something that is not in the best interests of shareholders, so we really do not want to be explaining it to them in understandable detail. Hence, Computershare is not be explaining the proposal to shareholders, just asking for the proxy.

Personally, I wouldn't touch Putnam with a stick after some unpleasantness with my employee's retirement savings program a number of years ago, but if were not planning to sell the position I would be going on line to find that proxy statement and smelling it very carefully.

[Lakewood90712]

Quote:

Originally Posted by MichaelB Yes! Said a little differently, vote your proxy so they don’t spend your money calling you asking for your vote.

Actually a good thought.

Called Putnam of Putnam today , was friendly call on both sides, and yes. they did hire a 3rd party to call directly. The explanation was it was due to a low response for the proposed action. My question to Putnam was , please explain how it is in the shareholders interest to spend shareholders money to do this. Response - crickets.

PS In the proxy materials, the 3 boxes are the usual, For, Against, Abstain. Also says if you sign the proxy and do not check any box it will be counted as For the proposal.

[RobbieB]

I've been voting stock for years now. The proxy generally has an online option and I do that. I never ever read the stuff either, just go with whatever the board wants to do.

[enginerd]

Sorry to go off-topic, but I can't hear shenanigans without thinking of this Super Troopers movie quote.

[JoeWras]

I've gotten called for proxies before.

Most recently (last year), Vanguard contacted me quite a bit about a vote for a change in the REIT fund. I don't remember a call, just a lot of communication about it.