U.S. and Massachusetts regulators have filed civil lawsuits against Putnam Investments and two of its former fund managers, contending for the first time in a widening investigation of the mutualfund industry that a fund company and some of its executives had committed securities fraud. Putnam, which has $272 billion under management and is the fifth-largest fund company in the UnitedStates, allowed some big investors to trade rapidly in and out of shares, despite its stated policy to prohibit such trades, the Securities and Exchange Commission said in its suit, filed on Tuesday.Regulators also contend that Putnam engaged in securities fraud by failing to disclose to fund shareholders or to its directors a series of personal trades by its managers that harmed publicshareholders. Improper trading by one fund manager dates to 1998, regulators said. The investigation of mutual fund improprieties, which began last month with a single complaint by New York Stateofficials against one hedge fund, is spreading quickly.

For the first time we are in the heart of the mutual fund business, said Norman Poser, professor of securities law at Brooklyn Law School. I can imagine there are going to be some really big reverberations from these disclosures.

Putnam sought on Tuesday to reassure investors and employers whose workers have its funds in their 401(k) retirement plans, as well as big institutions, which had voiced concerns about its lax controls. Putnam, a Boston-based unit of Marsh & McLennan, a large insurer, oversees more than 100 mutual funds for more than 12 million shareholders and 401(k) plan participants. In a statement responding to the accusations by the securities commission and the Commonwealth of Massachusetts, the company said it had not acted fraudulently. We have been cooperating with both the SEC and the Commonwealth, it said. We will work with them to resolve these issues in an appropriate and expeditious manner.

Putnam recently dismissed the fund managers who were sued by regulators on Tuesday. They are Justin Scott, 46, who was chief investment officer of Putnam’s International Equities Group, and Omid Kamshad, 41, who was chief investment office of its International Core Equity Group. Regulators contend that the men used nonpublic information about their funds’ holdings to profit personally in frequent trades. There are some 95 million Americans who are invested in mutual funds, representing half the households in this country, and they deserve better, said Stephen Cutler, director of enforcement at the SEC. We’re going to continue to be aggressive in pursuing appropriate enforcement actions. Mutual funds calculate their share prices, based on the value of the securities held in the portfolio, when the main U.S. stock markets close each day. But prices of non-U.S. securities can be hours old because markets elsewhere may have been closed for a long time. News in the intervening hours can sometimes make apparent which way those markets will move when they reopen, creating an opportunity for those who can trade freely in fund shares. According to the regulatory suits, Putnam had minimal controls to protect shareholders from self-dealing managers. Its system for detecting market timing by its own employees, for example, monitored trades during only one quarter of a given year, leaving nine months with no monitoring at all.