Franklin Templeton opposes the Sebi order and plans to challenge it in the SAT.


Franklin Templeton Asset Management (India) stated on Tuesday that it strongly disagrees with Sebi’s findings in the case of the winding up of six debt schemes in 2020.

Franklin Templeton Asset Management (India) said on Tuesday that it strongly disagrees with the conclusions of the Securities and Exchange Board of India’s ruling in the case of the winding up of six debt schemes in 2020 and has opted to appeal the decision to the Securities Appellate Tribunal (SAT).

On Monday, the Securities and Exchange Board of India (Sebi) restricted Franklin Templeton Asset Management (India) from establishing any new debt plan for two years and fined it Rs 5 million for breaking regulatory rules in the winding up of six debt schemes in 2020.

It has also been ordered to refund over Rs 512 crore in investment management and advisory fees (including interest) earned in relation to the six debt programmes.

As per the Sebi order, this sum will be utilised to refund unitholders.

“We strongly disagree with the conclusions in the Sebi order and intend to submit an appeal with the Hon’ble Securities Appellate Tribunal,” a Franklin Templeton representative stated in response to Sebi’s judgement.

Franklin Templeton, he continued, sets a high value on compliance and believes it has always behaved in the best interests of unitholders and in conformity with legislation.

Franklin Templeton AMC was found to have committed severe lapses/violations in scheme categorisation (by repeating high-risk strategy across numerous schemes) and Macaulay duration calculation, according to Sebi (to push long-term papers into short duration schemes).

It has also broken the law in terms of non-exercise of exit options in the face of an approaching liquidity crisis, securities valuation practises, risk management methods, and investment due diligence, according to the report.

“Investors have suffered losses as a result of the irregularities discovered in the debt schemes examined. The noticee (Franklin Templeton AMC) was required by law to follow the provisions of the Mutual Regulations and Circulars issued under it, which it did not do “Sebi took notice.

These programmes supplied a critical source of finance to India’s rising businesses, and they have shown to be sound investments to date. According to him, the schemes are now liquidating many of these holdings at fair market value under normal market conditions.

Franklin Templeton stated that its immediate priority and emphasis remains on assisting the court-appointed liquidator in disposing the portfolio of schemes under winding up and delivering funds to unitholders as quickly as possible while maintaining value.