After ED case, SEBI serves notices to Franklin Templeton
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After ED case, SEBI serves notices to Franklin Templeton

SEBI asked the fund house why action should not be taken against them for not carrying out their fiduciary duties towards investors and for lapses in the risk-management process

  • March 4, 2021  
  • |  
  • UPDATED   12:18 IST
After ED case, SEBI serves notices to Franklin Templeton
SEBI, in its show-cause notices to Franklin Templeton AMC and its trustees, alleged code of conduct breaches

Markets regulator SEBI (Securities and Exchange Board of India) has issued show-cause notices to Franklin Templeton Asset Management Company (AMC), key managerial employees, and trustees, basis findings of a forensic audit report.

SEBI had directed the audit after the fund house discontinued six debt mutual fund schemes in April 2020. The regulator, in its show-cause notices to Franklin Templeton AMC and its trustees, alleged code of conduct breaches.

SEBI also asked the fund house why action should not be taken against them for not carrying out their fiduciary duties towards investors and for lapses in the risk-management process.

The notices have been served to key managerial employees comprising Vivek Kudva, head of Asia Pacific (APAC) for Franklin Templeton, his mother, and his wife Roopa Kudva, MD, Omidyar Network India, the Economic Times reported.

Also Read: ED to investigate Franklin Templeton, senior officials for money laundering

The notices alleged contravention of the Prohibition of Fraudulent and Unfair Trade Practices as well as mutual fund regulations.

Meanwhile, Franklin Templeton told the publication that detailed replies have been sent to SEBI.

"None of the key persons has redeemed any units post the trustees taking the in-principal decision to wind-up the schemes," said a company spokesperson in an email.

"Schemes under winding up continue to have significant investment from employees and management of Franklin Templeton. All redemption applications submitted by unitholders until April 23, 2020, were processed in the normal course of business. Our interests remain aligned with those of our investors," the spokesperson added.

According to the forensic audit report, Kudva and his family members as well as some senior Franklin Templeton personnel pulled out some of their investments between March and April 2020.

The auditor also highlighted that some of the directors on the AMC's board and the trustee company also drew out a portion of their investments from the stressed schemes shortly before they were frozen for redemptions on April 23, 2020.

Also Read: SBI Mutual Fund to distribute Rs 9,122 crore to unitholders of Franklin's 6 shut schemes