(Bloomberg) -- Putnam Investments,  the sixth-largest U.S. mutual fund manager,  agreed to pay $110 million to settle federal  and state allegations it failed to disclose  improper trading by money managers.

Putnam's penalty "makes clear that self-dealing  by mutual fund managers will be severely punished,"  said Stephen Cutler, the Securities and Exchange  Commission's director of enforcement, in a  statement. The sanctions are the smallest  of four levied so far against fund companies  in the 10-month trading investigation.

The SEC, along with state regulators including  Massachusetts Secretary of the Commonwealth  William Galvin, have now extracted about $1.8  billion in sanctions from companies such as  Bank of America Corp. and Alliance Capital  Management Holding LP. The probes also have  resulted in more than 80 executives losing  their jobs including Putnam's former chief  executive, Lawrence Lasser.

The case against Boston-based Putnam "uncovered  a corporate culture that turned a resolute  blind eye to the most egregious conduct,"  Galvin said in a statement.

Regulators sued Putnam, a unit of Marsh  & McLennan Cos., on Oct. 28 for failing to  stop fund managers Justin Scott and Omid Kamshad  from making frequent trades in funds that  were contrary to fund prospectuses and diluted  returns for other shareholders. Galvin also  sued Putnam over trades by members of a 401(k)  union retirement plan.

Putnam Chief Executive Charles "Ed" Haldeman,  55, said in a statement that today's agreements  ``reflect our commitment to put these matters  behind us and continue to move forward as  a firm focusing on rebuilding investor confidence."

Shares of Marsh & McLennan rose $1.26, or  2.8 percent, to $47 in New York Stock Exchange  composite trading. Analysts with Morgan Stanley  issued a report today saying the settlements  didn't affect their "equal-weight" rating  on the stock.

Fund Outflows

About $54 billion was pulled from Putnam  in the fourth quarter and an additional $5.6  billion was yanked from the company's mutual  funds in the first two months of this year.  The company had $227 billion of assets at  the end of March.

At least 15 Putnam employees have left the  company since the investigation emerged. In  addition to Kamshad and Scott, those leaving  include four other money managers.

The SEC settlement requires Putnam to pay  $55 million to compensate investors for losses  caused by the trading. The sanction equals  about 10 times the amount regulators estimate  investors lost because of the abusive trading.

Separately, Galvin fined Putnam $50 million  and ordered the company to pay $5 million  in restitution to the affected funds. "When  you look at the fine as a percentage of damages  to the fund, the fine is very significant,"  he said in an interview.