Sebi dismisses RTI appeal in Franklin Templeton MF's wind-up case

The appellate authority of Securities and Exchange Board of India (Sebi) for Right To Information (RTI) Act, has dismissed a query pertaining to the course of action taken by the market regulator following the wind-up of schemes by Franklin Templeton Mutual Fund (MF).

The RTI appeal raised questions on why Sebi had not made FT MF take the debt papers onto its own book and pay the money to the unitholder (the appellant). It had also asked as to why the appellant should suffer for their wrongdoing and Sebi’s silence and inaction.

Sebi in its response observed that the queries were in the nature of seeking clarification or opinion and accordingly could not be construed as ‘information’ under section 2(f) of the RTI Act.

Sebi also observed that as a stock market regulator, it conducts investigation to examine alleged or suspected violation of laws and regulations. However, post investigation, whenever violations are established, appropriate enforcement actions are taken under provisions of the Sebi act and the existing regulatory framework.

These “culminate into issuance of orders and the same are available on the Sebi website."

However, finding Sebi’s responses unsatisfactory, an appeal was filed by the unitholder.

Anand Baiwar, appellate authority under the RTI Act, did not find any “deficiencies” with Sebi’s responses. On a query pertaining to action taken by Sebi against FT MF, Baiwar said, “It is understood that the respondent (Sebi) has neither confirmed nor denied the existence of examination or investigation. I find that the same is justified where disclosure of existence of investigation or otherwise itself would amount to disclosure of exempted information”.

“Further, such examination, or investigation, may or may not establish the suspected violations or lead to enforcement actions,” he said.

He stated that maintaining confidentiality of investigation is important since reports of an investigation may result in unwarranted speculation or concern in the market, may affect evidence collection during the investigation or may result in unnecessary harm to third parties.

Sebi’s response that any regulatory action initiated post-investigation is available on its website, was also viewed favourably by the appellate authority.