No adverse findings so far: Franklin Templeton MF on money laundering

Franklin Templeton Mutual Fund on Friday claimed that there were “no adverse findings” against it or its employees, days after the Enforcement Directorate registered a money laundering case against them and Sebi sent a show-cause notice.

It has filed a detailed response to the show-cause notice issued by the Securities and Exchange Board of India (Sebi) to the company and its key personnel who had redeemed their investments days or weeks before the closure announcement.

The fund house had shuttered its six debt schemes in April last year due to the severe market dislocation and illiquidity caused by the Covid-19 pandemic. With respect to the accusations regarding personal transactions of employees and management, Sanjay Sapre, president at Franklin Templeton Asset Management (India) in the letter to investors, said: “Personal redemptions by certain individuals before the winding-up decision are under review and those individuals have cooperated fully with that process and submitted detailed responses to Sebi, which are under consideration.”

The fund house also faced the heat from the ED, which has registered a money-laundering case against the fund house. “I also want to take this opportunity to address some recent unsubstantiated reports regarding Franklin Templeton’s practices around risk management, inter-scheme transfers, and calculation of the Macaulay Duration, amongst others, as well as personal transactions by employees and management,” said Sapre in the letter.
 

He added that because these issues were under regulatory review, “we are constrained from commenting on specific details at this juncture, but we can confirm that to date, there have been no adverse findings against Franklin Templeton or its employees or management.”

The letter also said that SBI Funds Management, with support from Franklin Templeton, has finalised the Standard Operating Procedure (SOP) to monetise assets of the schemes under winding up and distribute the proceeds, and filed the SOP with the SC.