March 14, 2021 4:19:00 am
Franklin Templeton Mutual Fund, which closed down its six schemes last April, said the personal redemptions by certain individuals before the winding-up decision are under review. These individuals have co-operated fully with that process and submitted detailed responses to market regulator Sebi, which are under consideration, the fund house said in a letter to the investors.
With respect to the accusations regarding personal transactions of employees and management, the fund house said it takes such matters seriously. It has claimed that so far, there have been no adverse findings against the fund house or its employees or management.
This comes following reports of the Securities and Exchange Board of India (Sebi) issuing show-cause notices to Templeton and its officials with regards to practices around risk management, inter-scheme transfers and personal transactions by employees and management, among others.
There were allegations that some individuals managed to redeem their holdings just before the closure of the six schemes.
“We have submitted detailed responses to show-cause notices issued by Sebi. We cannot go into detail of our responses, but we believe that we acted in compliance with applicable regulations and rules and that we have strong defenses to the allegation,” Sanjay Sapre, president, Franklin Templeton Asset Management (India) Pvt Ltd, said in the letter to investors.
As directed by the Supreme Court, SBI Funds Management has already distributed Rs 9,122 crore to investors. “We have accrued another Rs 1,180 crore in cash as on February 26, 2021, and we expect that this distributable amount will increase rapidly once active monetization of assets through sales begins. Further, the net asset values of all six schemes today are higher than those values when the trustee determined to wind up the schemes back in April of 2020,” the letter said.
Sapre further said the schemes under winding up continue to have significant investment from employees and management of Franklin Templeton (as well as from the asset management company and other group companies of Franklin Templeton). “The fund house has been fully transparent with the regulator and has extended its fullest cooperation to them, to help examine the circumstances surrounding the winding-up of these schemes by Franklin Templeton last year,” he added.
“I also want to take this opportunity to address some recent unsubstantiated reports regarding Franklin Templeton’s practices around risk management, inter-scheme transfers and calculation of the Macaulay Duration, amongst others, as well as personal transactions by employees and management,” Sapre said.
He said these issues are under regulatory review and “we are constrained from commenting on specific details at this juncture, but we can confirm that to date, there have been no adverse findings against Franklin Templeton or its employees or management”.
Franklin Templeton MF closed six debt mutual fund schemes with assets under management of around Rs 26,000 crore in April 2020, citing redemption pressure and lack of liquidity in the bond market. The six schemes were Franklin India Low Duration Fund, Franklin India Ultra Short Bond Fund, Franklin India Short Term Income Plan, Franklin India Credit Risk Fund, Franklin India Dynamic Accrual Fund and Franklin India Income Opportunities Fund.
According to Sapre, SBI Funds Management, the Supreme Court-appointed liquidator, is in the process of preparing to liquidate the schemes under winding up and distribute proceeds to unitholders at the earliest opportunity.
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