Investor body slams Amfi for not protecting Franklin Templeton unit holders

Investor group Chennai Financial Markets and Accountability (CFMA) has alleged that the Association of Mutual Funds in India (AMFI), a nodal association of mutual funds across India, is acting against the unit holders of Franklin Templeton Mutual Fund (FTMF) and trying to protect its senior management and board against the first information report (FIR) lodged with the economic offences wing (EOW) of Chennai Police.

“Amfi has been a mute spectator ever since the FTMF scam broke in April this year and has now suddenly rushed to defend the fund house by calling an FIR registered against it as a ‘dangerous and undesirable precedent’,” the investor group observed.

It said that it was surprising that Amfi wanted Sebi to govern and execute all actions pertaining to mutual funds, including criminal cases: “Amfi was deliberately feigning ignorance about the fact that banks, which are regulated by the RBI, get prosecuted by law enforcement agencies like the EOW or CBI in case of criminal cases involving loss to depositors as in the case of Yes Bank, PMC Bank, etc.”

CFMA alleged that Amfi was undermining a lawfully registered FIR against FTMF when it was not privy to the forensic audit. It said that Amfi was turning a blind eye to the fact that the FIR was registered in full fairness and the matter was discussed in the Karnataka High Court, and EOW, Chennai was given enough time to investigate the matter following which it found merit in registering the FIR.

CFMA further added that the performance of bodies like Amfi needed closer examination to stop recurrence of risks like FTMF, and to ensure that the body sought the protection of investors rather than functioning as a marketing agency.  

“It is rather intriguing as to why Amfi showed a complete lack of interest towards the pain and suffering of 300,000 unit holders and remained a mute spectator during the entire proceedings in the last six months but has now suddenly sprung up against the FIR registered against Franklin Templeton,” it said.

In a letter to the Securities and Exchange Board of India a few days ago, Amfi had said that asset management companies were concerned that bona-fide decisions and actions of mutual funds, which could go wrong owing to factors beyond their control, could be construed as criminal action.