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Tuesday, May 26, 2020

Franklin Templeton apologises to Sebi

SEBI pulled up Templeton after its global CEO shifted the blame for the recent winding down of its six schemes to Sebi’s October 2019 decision to not let funds invest more than 10 per cent in unlisted instruments.

By: ENS Economic Bureau | Mumbai | Published: May 9, 2020 2:15:39 am
Franklin Templeton Mutual Fund, SEBI, Franklin Templeton, mutual funds, business news, indian express On Thursday, stung by Johnson’s accusations, the Securities and Exchange Board of India (Sebi) asked Templeton to focus on returning money to investors “as soon as possible”. (Photo: Noah Berger/Bloomberg News)

Franklin Templeton has “unconditionally apologised” to Sebi for its global CEO’s statement that the market regulator’s regulatory changes led to abrupt closure of its six credit risk schemes with a corpus of Rs 28,000 crore.

The fund house also claimed that the media quoted Jenny Johnson, its president & CEO, out of context. “We deeply regret any unintended slight this may have caused to the esteemed offices of Sebi whom we have always held in highest regard and unconditionally apologise for the same,” it said in a notice.

On Thursday, stung by Johnson’s accusations, the Securities and Exchange Board of India (Sebi) asked Templeton to focus on returning money to investors “as soon as possible”.

The regulator pulled up Templeton after its global CEO shifted the blame for the recent winding down of its six schemes to Sebi’s October 2019 decision to not let funds invest more than 10 per cent in unlisted instruments.

Also Read | Post-Templeton fiasco, credit risk funds see outflows of Rs 19,238 crore

“Despite the regulations being clear, some mutual fund schemes seem to have chosen to have high concentrations of high risk, unlisted, opaque, bespoke, structured debt securities with low credit ratings and seem to have chosen not to rebalance their portfolios even during the almost 12 months available to them so far,” the markets regulator said in a statement.

“It is clarified that some media outlets in India have quoted Ms Johnson out of context, which diluted the essence of her responses. The headlines and articles erroneously suggested that Ms Johnson stated that Sebi’s guideline on unlisted securities was the main reason for the decision to wind up the schemes. This is neither factually correct, nor substantiated by the comments made during the conference call,” Franklin Templeton said.

In an investor conference call earlier this week, Johnson had said the high-yield market is still very immature in India.

Sources said Franklin Templeton’s India unit is under Sebi’s scrutiny over whether it had violated rules or acted in the best interest of its investors.

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