Meanwhile, the SEC also indicated it will seek charges against three former executives at Gateway Inc., against Siebel Systems and two of its executives, and for good measure, is investigating yet another company, Avici Systems, for its relationship with Qwest Communications International Inc.

The Putnam settlement is "just convincing evidence of the ineffectiveness of the Securities and Exchange Commission," Galvin said. "They should be more interested in wrongdoing instead of papering it over, which is what this is."

Spitzer was only slightly more diplomatic, saying that the settlement fails to address "reforms necessary to ensure investors are charged the lowest possible fees. The fee structure has benefited management companies at the expense of investors, he said, and the agreement completely fails to address this critical governance issue."

Spitzer said his office will continue, undeterred, to investigate Putnam and others.

Meanwhile, the SEC accused former Gateway Chief Executive Jeffrey Weitzen, former Chief Financial Officer John J. Todd, and former Controller Robert D. Manza of fraud, lying to auditors and other securities-law violations.

Siebel Systems Inc. said the SEC staff has recommended enforcement actions against the company and two of its executives, for alleged violations of Regulation FD related to statements the officers were said to have made before and during an April 30 meeting with analysts.

Avici is the eleventh company overall to be investigated for dealings with Qwest. Others who have made similar disclosures include Redback Networks and Tellium, Inc.