SAT maintains Sebi’s order on Franklin Templeton


NEW DELHI: Franklin Templeton Asset Management (India) said on Monday that the Securities Appellate Tribunal (SAT) suspended Sebi’s order, under which the regulator banned the asset management company from launching any new programs of debt for two years.
In addition, the regulator had asked Franklin Templeton to reimburse investment management and advisory fees up to Rs 512 crore, including interest, received under its six debt programs which are now closed.
“With reference to the order issued by Sebi’s Whole Time Member (WTM) on June 7, 2021, Franklin Templeton Asset Management (India) Pvt Ltd has filed an appeal and a stay request before the Honorable SAT. After hearing the parties, the Honorable SAT has suspended the execution of the order placed by the WTM, “a spokesperson for Franklin Templeton said in a statement.
The case was listed on August 30, 2021 for new directions, he added.
In his order, Sebi found that Franklin Templeton Asset Management (India) “had committed serious shortcomings / violations in categorizing a plan (by replicating a high risk strategy across multiple plans) and calculating the Macaulay term (to push long term papers towards short term regimes). ”
In addition, he committed violations with respect to the non-exercise of exit options in the face of the emerging liquidity crisis, securities valuation practices, risk management practices and investment due diligence, the regulator noted.
“Due to irregularities in the operation of the inspected debt programs, losses were caused to investors. which he failed to do, “Sebi said.
According to Sebi, the serious defaults and breaches appear to be a consequence of Franklin Templeton AMC’s obsession with executing high-yield strategies without proper consideration of the accompanying risk dimensions, he added.
Franklin Templeton MF announced the closure of its six debt mutual funds on April 23, 2020, citing pressure on redemptions and the lack of liquidity in the bond market.
The programs – Franklin India Low Duration Fund, Franklin India Dynamic Accrual Fund, Franklin India Credit Risk Fund, Franklin India Short Term Income Plan, Franklin India Ultra Short Bond Fund and Franklin India Income Opportunities Fund – totaled approximately Rs 25,000. crore as assets under management.
Following the decision to wind up the schemes, the Securities and Exchange Board of India (Sebi) ordered a forensic audit and appointed Chokshi and Chokshi LLP, Chartered Accountants, to conduct a forensic audit of Franklin Templeton MF, Franklin Templeton AMC and trustees, in particular with respect to the six debt regimes.


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