Sebi extends deadline for Franklin Templeton MF audit by about a month

As per earlier timeline, Chokshi & Chokshi was to complete by first week of July but given the tedious nature of the probe, it will be allowed to submit its finding by end July or first week of August

The Securities and Exchange Board of India (Sebi) has granted more time to auditor Chokshi & Chokshi which is looking into the dealings of six schemes shut down by Franklin Templeton Mutual Fund (MF), said people with the knowledge of the development.

As per the earlier timeline, the chartered accountant and forensic audit firm was to complete the investigation by the first week of July. However, given the tedious nature of the probe, the auditor will be allowed to submit its finding by end July or first week of August, added a source.

“Initially, Sebi had given Chokshi & Chokshi 30 days. However, the scope of the probe is quite wide and Sebi has allowed more time,” said a person.

Franklin Templeton MF declined to comment on the issue.

A month ago, Sebi tasked Chokshi & Chokshi to examine any regulatory violations or collusion between the fund house and investee companies or fund house and large investors to ensure all processes were allowed in fair and transparent manner.

 

Delay in submission of audit findings could potentially delay the e-voting process required to seek unitholders’ nod to wind up the schemes.

Initially, the e-voting process was scheduled to held between June 9 and 11. However, the process was delayed after certain investors approached various high courts (HCs) against the fund house.

One of the contention of the petitioners was that the voting should not be allowed until the audit report is made public so that investors can make an informed choice. A Sebi council had argued before the Gujarat HC that the forensic audit report was for internal information of the regulator and cannot be a ground to delay the voting. The court had still granted a stay on the voting process till the forensic audit report was made available in public domain.

On June 20, the Supreme Court directed that all matters related to winding up of Franklin Templeton MF schemes be heard in the Karnataka High Court. Franklin Templeton had prayed before the apex court to vacate Gujarat HC’s stay on –voting. The SC, however, didn’t intervene in Gujarat HC’s stay order on the e-voting process.