Franklin Templeton Asset Management (India) on Monday said the Securities Appellate Tribunal (SAT) has stayed Sebi's order, whereby the regulator had barred the asset management firm from launching any new debt scheme for two years. In addition, the regulator had asked Franklin Templeton to refund investment management and advisory fees to the tune of Rs 512 crore, including interest, collected with respect to its six debt schemes which are now shut. "With reference to the order issued by Whole Time Member(WTM) of Sebi on June 7, 2021, Franklin Templeton Asset Management (India) Pvt Ltd filed an appeal and an application for stay before the Hon'ble SAT. "After hearing the parties, the Hon'ble SAT has stayed the operation of the order passed by the WTM," a Franklin Templeton spokesperson said in a statement. The matter has been listed on August 30, 2021 for further directions, he added.
Sebi on Monday imposed a penalty totalling Rs 15 crore on senior officials of Franklin Templeton AMC and its trustee for violating regulatory norms in the case of winding up of six debt schemes in 2020. However, a spokesperson of Franklin Templeton said they disagree with the findings in Sebi's order and intend to file an appeal with the Securities Appellate Tribunal (SAT). A fine of Rs 3 crore has been levied on Franklin Templeton Trustee Services Pvt Ltd and Rs 2 crore each on Franklin Asset Management (India) Pvt Ltd President Sanjay Sapre and its chief investment officer Santosh Kamat, according to the Sebi order. In addition, the regulator imposed a penalty of Rs 1.5 crore each on fund managers -- Kunal Agarwal, Pallab Roy, Sachin Padwal Desai and Umesh Sharma -- as well as former fund manager Sumit Gupta.
Allaying investors' fears, Franklin Templeton AMC has said Sebi's order prohibiting the company from launching new debt funds will have no bearing on existing schemes managed by it. Sebi on Monday barred Franklin Templeton Asset Management (India) from launching any new debt scheme for two years and imposed a penalty of Rs 5 crore for violating regulatory norms in the case of winding up of six debt schemes in 2020. Also, it has been asked to refund investment management and advisory fees of over Rs 512 crore (including interest) collected with respect to the six debt schemes. This amount will be used to repay unitholders, as per Sebi order.
Franklin Templeton Asset Management (India) on Tuesday said it strongly disagrees with the findings in Sebi's order in the case of winding of six debt schemes in 2020 and has decided to challenge the direction in Securities Appellate Tribunal (SAT).
The Securities Appellate Tribunal has stayed a Sebi order that barred Franklin Templeton's Asia Pacific head Vivek Kudva and his wife Roopa from the securities market for one year.
Any speculation suggesting otherwise, or any rumours around sale of our business in India are incorrect and simply that -- rumours, says head of the US-based asset manager.
Franklin Templeton Mutual Fund has said its six shut schemes have received Rs 15,272 crore from maturities, coupons and pre-payments since closing down in April 2020. The fund house had shut six debt mutual fund schemes on April 23 last year, citing redemption pressures and lack of liquidity in the bond market.
Sebi on Monday barred Franklin Templeton AMC from launching any new debt scheme for two years and fined it Rs 5 crore for violating regulatory norms in the case of winding up of six debt schemes in 2020. Also, it has been asked to refund investment management and advisory fees to the tune of Rs 512 crore, including interest, collected with respect to the six debt schemes, Sebi said in its 100-page order. In a separate order, the regulator has barred Vivek Kudva, former head of Asia Pacific (APAC) for Franklin Templeton, and his wife Roopa from the securities market for one year for redeeming units of Franklin Templeton MF schemes while in possession of non-public information.
The Supreme Court on Tuesday ordered that Rs 9,122 crore be disbursed within three weeks to the unitholders of Franklin Templeton's six mutual fund schemes which are proposed to be wound up.
SBI Funds Management (SBI MF) will distribute the fifth tranche of Rs 3,303 crore to unitholders of Franklin Templeton Mutual Fund's six shuttered schemes during the week beginning Monday. With this, the total disbursement will reach Rs 21,080 crore, amounting to 84 per cent of assets under management (AUM) as on April 23, 2020, a Franklin Templeton MF spokesperson said on Sunday. Under the first disbursement in February, investors received Rs 9,122 crore, while Rs 2,962 crore were paid to investors during the week of April 12, Rs 2,489 crore during the week of May 3 and in the latest disbursement during the week of June 7, investors were paid Rs 3,205 crore.
The Supreme Court on Friday upheld the validity of e-voting process for the winding up of six mutual fund schemes of Franklin Templeton, and said disbursal of funds to unit holders will continue.
Franklin Templeton Mutual Fund, which has closed six debt schemes, has said the winding-up process will be delayed in the absence of authorisation from investors and further steps will be possible only after seeking fresh approval from them. It further said that investors who do not have an e-mail ID or mobile number registered with the fund house will not be able to participate in the voting process. The date on which the voting would start has not been disclosed yet.
Franklin Templeton Mutual Fund on Thursday said its six shut schemes have received Rs 11,907 crore from maturities, pre-payments and coupon payments since closing down in April. Franklin Templeton MF had shut six debt mutual fund schemes on April 23, citing redemption pressures and lack of liquidity in the bond market. The schemes -- 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 -- together had an estimated Rs 25,000 crore as assets under management.
Due to default in payment, the securities of FICL and NDIL will be valued at zero basis AMFI standard hair cut matrix, and interest accrued and due will be fully provided.
With a 'yes' vote, there is a more foreseeable outcome, while a 'no' could result in greater uncertainty, for which retail investors may not have the appetite.
The Securities and Exchange Board of India (Sebi) has directed Franklin Templeton MF to pay Rs 5 crore as penalty, return over Rs 450 crore collected as 22-month investment management and advisory fees, and imposed a two-year ban on launching new debt schemes for alleged irregularities in running six of its debt schemes that were shuttered last year.
Industry body Association of Mutual Funds in India on Friday assured investors that a majority of fixed income mutual funds assets are invested in superior credit quality securities and such schemes have appropriate liquidity to ensure normal operations. The statement by the industry body came after Franklin Templeton Mutual Fund voluntarily decided to wind up its six debt schemes citing redemption pressure and lack of liquidity in bond markets due to the coronavirus pandemic.
Sources said SBI Funds Management will distribute the proceeds to unitholders following liquidation of some securities held under the scheme.
The fund house had offered two options to affected investors -- either monetisation of assets by trustees or hiring a third party to conduct the process.
'It takes time and the experience of a few market cycles to develop awareness about one's true risk appetite.'
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There was no postal intimation to unitholders who didn't have a registered email address, according to a letter that Midas Touch Investors Association sent to Sebi.
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After the Franklin Templeton episode, investor confidence has been shaken. Known brands have become more relevant to investors, as long as this psychological impact lasts.
'Investors should restrict themselves to a few category schemes with high quality portfolios apart from overnight and liquid funds.'
'We know that returning money to unitholders at the earliest is the first and most important step towards resurrecting our brand and regaining investor trust.'
R Sukumar of Franklin Templeton Invetments (India) continues to be positive on the longer term prospects of the market although he feels that rising interest rates and inflation could pose as a problem in the short term.
'MFs acted as reckless lenders and not as prudent investors.' 'Clearly, how debt funds are being run is a systemic issue,' warns Debashis Basu.
We expect the Indian equity market to continue attracting interest from local as well as foreign investors. This is because India's economy is expected to continue to record sustained economic growth.
'Looking at the speed at which changes were made post the Franklin Templeton issue, we are awaiting more stricter norms in the months to come.'
Despite the toned-down estimates, Sukumar Rajah, MD and CIO -- Asian Equities, Franklin Templeton Investments, tells Business Standard that India maintains the lead in economic growth vis-a-vis most of its peers and the regulatory risk will reduce.
Schemes among the six wound up by the fund house had given a loan of Rs 518 crore against non-convertible debentures to the firm in March 2019, according to ED's chargesheet.
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