Disgraced US mutual fund group Putnam Investments is set to lose hundreds of millions of pounds in mandates from the UK's largest pension funds, including the £2bn (€2.85bn) Lothian pension fund, following charges of improper mutual fund trading.

The City of Edinburgh Council, trustees to the fund, said it placed Putnam under review as one of its equities fund managers because of the scandal over allegedly permitting clients to improperly trade in its mutual funds. Putnam has since settled federal and state fraud charges without admitting guilt but still faces losing the US equities mandate which it has held at Lothian since 1994.