Franklin Templeton: The Plot Gets Murkier
On April 23, 2020 at the height of the global pandemic and lockdown, Franklin Templeton Mutual Fund announced the voluntary wind-up of six of its debt schemes due to redemption pressure and lack of liquidity in the bond market. This seemed quite a natural and logical decision at that time, necessitated to safeguard the interest of unit holders of these funds, especially the smaller ones. Nonetheless, as the event unfolded in the next 11 months, it seems there was more than what met the eye.
If media reports are to be believed, the forensic audit done by audit firm Choksi and Choksi, appointed by SEBI, has surfaced with many startling revelations. Between March 1 and April 23, 2020, key personnel of Franklin Templeton and their associate companies redeemed mutual fund units worth Rs 56 crore. The maximum withdrawal was done on March 23, the same day when SEBI allowed the fund house to exceed the borrowing limit given in MFR from 20 per cent to 30 per cent for Franklin India Opportunities Fund.
What looks abnormal is that the same set of people who sold their units from such funds was also part of a presentation that highlighted the liquidity and concentration risk of these funds. A fund house that has a track record of more than a quarter-century in India is expected to lead the way for others. It is a case of cheating more than 3 lakh unit holders of these funds, who did not get the same price-sensitive information that a selected few from the organisation received. There is a clear case where they failed to fulfil their fiduciary relationship with their unit holders.
If the allegations are proved to be right, strict action should be taken against everyone involved. The message should go loud and clear to everyone that retail investors should not be taken for granted and in fact they should always remain at the forefront before any such decision is taken. It will help to build trust among investors and help the industry grow. Meanwhile, from this issue, we are starting a new section on insurance. The idea is to make it complete from a financial planning perspective. Please share your thoughts and ideas about different stories that you would like to see in this section.
SHASHIKANT