NEW YORK (CNN/Money) - The Securities and Exchange Commission said Thursday it reached a settlement with Putnam Investments that calls for major reforms at the mutual fund company and repayment to its investors hurt by market timing.

State regulators, meanwhile, who also have been investigating Putnam for improper trading, were critical of the settlement.

In a statement, the SEC said Putnam has agreed to "significant and far-reaching corporate governance, compliance, and ethics reforms." The company settled without admitting or denying guilt, the SEC said.

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Putnam, a unit of Marsh & McLennan Cos. (MMC: down $0.61 to $44.80, Research, Estimates), also agreed to pay a fine and other monetary relief, but the amounts have not yet been determined. The SEC's Boston office told CNNfn that the SEC will retain an independent consultant to calculate the cost to Putnam shareholders of improper trading at the firm. That amount will be determined within 195 days. Administrative Law Judge James Kelley in Washington, D.C., will then determine the penalty Putnam has to pay, unless Putnam and the SEC agree to an amount first.

"The reforms Putnam will undertake as part of the commission's order are intended to provide real and substantial protections for mutual fund investors," said Stephen Cutler, director of the SEC enforcement unit.

Stephen Cutler, director of enforcement with the Securities and Exchange Commission, talks about the Putnam settlement and potential reforms. Play video (Real or Windows Media)

The SEC alleged Putnam committed securities fraud by failing to disclose self-promoting trading practices by some of its employees, and that the company didn't take the proper measures to uncover and discourage the activities.

Under the settlement, Putnam agreed to require that all employees who invest in Putnam funds must hold those investments for at least 90 days, and employees who are responsible for managing money will have to hold their investments for at least one year.

In addition, Putnam will put in place a number of measures to ensure employee trading compliance.

Putnam also agreed to other reforms, including a compliance review by an independent third party once every other year starting in 2005.

Putnam still faces civil charges made by Massachusetts regulators. And the U.S. Attorney for the Southern District of New York has issued a subpoena for Putnam documents, which could mean criminal charges are being considered, lawyers told Reuters.

Shortly after the news of the SEC agreement was released, Massachusetts securities regulator William Galvin said that he would file more charges against Putnam and that he was outraged at the settlement the mutual fund company reached.

"We will be filing more charges relating to market-timing trading at Putnam by people in high positions," Galvin told Reuters. He would not comment on when the charges might be levied or against whom.

On Friday, however, the Wall Street Journal, citing a person familiar with the matter, reported that Massachusetts securities regulators were investigating short-term trading in the personal accounts of Putnam Investments' general counsel.

Galvin also said that the SEC deal would not help reform the mutual fund industry.

New York Attorney General Eliot Spitzer agreed.

"Today's agreement between Putnam and the SEC provides some preliminary measures to address certain of the issues raised in the actions filed against Putnam. However, these measures represent only a starting point for needed industry reforms in fund governance and oversight and do not address crucial issues involving restitution to fund holders, fines and penalties," Spitzer said in a statement Thursday.

The agreement, he added, doesn't address "the structural reforms necessary to ensure that investors are charged the lowest possible fees. To date mutual funds have agreed to fees that benefit management companies at the expense of investors. As such, this document fails to address the critical issue facing mutual fund governance. The SEC's document should not be viewed as a template for settlement with our office. Our investigation of Putnam is continuing."

Since charges were filed against Putnam, investors have pulled billions of dollars out of Putnam funds. Public pension plans in Iowa, New York, Pennsylvania, Rhode Island, Massachusetts and Vermont have all said they are firing the firm. So, too, did three New York City pension plans.  

-- Reuters contributed to this report