Massachusetts Stiffs Putnam Whistle-Blower

The practice, while arguably not illegal, was certainly unethical and was against the company's rules.

When Scannell approached managers with his concerns, they laughed at him. A few nights later he was assaulted in a parking lot by a union thug and hit over the head with a rock.

Scannell went to the local office of the Securities and Exchange Commission. They yawned and said they'd get back to him. He waited five months. They didn't.

Finally, in exasperation, in September 2003 he walked into the offices of Massachusetts Secretary of State Bill Galvin and spoke to his securities division chief, Matt Nestor. Galvin's office regulates the securities industry in the state.

Within hours, Nestor and Galvin had sent subpoenas to Putnam, which is a unit of Marsh & McLennan(MMC Quote), and soon followed those with action against other mutual fund companies.

Putnam eventually agreed to pay $193 million, including fines and restitution to investors, as a result of the market-timing scandals. A number of senior managers left the company. Investors have pulled tens of billions from Putnam in the wake of the scandal, and parent company Marsh & McLennan has agreed to sell Putnam to Canada's Power Financial for $3.9 billion"

Larry Lasser, the Putnam chief who merrily presided over this culture of corruption, walked away with tens of millions of dollars. Some of the fund managers fired in the scandal are now making millions more running hedge funds.

The mutual fund industry has enjoyed years of skyrocketing assets and profits, thanks to the bull market. And investors who had been ripped off by the scandal got hundreds of millions of dollars in restitution.

And Scannell?