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SAT Stays Sebi's Order on Franklin Templeton to Refund Rs 512 Crore

The matter has been listed on August 30, 2021 for further directions

Franklin Templeton Asset Management (India) on Monday said the Securities Appellate Tribunal (SAT) has stayed the Securities and Exchange Board of India’s  (Sebi) order, whereby the regulator had barred the asset management firm from launching any new debt scheme for two years.

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The regulator had asked Franklin Templeton to refund investment management and advisory fees to the tune of Rs 512 crore, including interest, collected concerning its six debt schemes which are now shut.

"With reference to the order issued by the 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 in its order found that Franklin Templeton Asset Management (India) "committed serious lapses/violations about a scheme categorisation (by replicating high–risk strategy across several schemes) and calculation of Macaulay duration (to push long term papers into short duration schemes)."

Also, it committed violations in respect of non–exercise of exit options in the face of an emerging liquidity crisis, securities valuation practices,  risk management practices, and investment-related due diligence, the regulator had noted.

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"As a result of the irregularities in running the debt schemes inspected, the loss has been caused to the investors. The noticee (Franklin Templeton AMC) was under a statutory obligation to abide by the provisions of the Mutual Regulations and Circulars issued thereunder, which it failed to do," Sebi had said.

Franklin Templeton MF announced shutting its six debt mutual fund schemes on April 23, 2020, citing redemption pressures and lack of liquidity in the bond market.

After the decision to wind up the schemes, 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, particularly in respect to the six debt schemes. 

 

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