Sebi, not EOW, should handle mutual fund issues: Franklin Templeton

Sebi, the specialised regulator for the securities market, is best placed to handle any issues related to mutual fund investments, FT said in a note to unitholders

Franklin Templeton Asset Management India (FTAMIL) has said the Securities and Exchange Board of India (Sebi) -- rather than the Economic Offences Wing (EOW) – should deal with issues related to mutual fund investments.

“We have the utmost respect for all statutory authorities, including EOW. However, we believe that Sebi, the specialised regulator for the securities market, is best placed to handle any issues related to mutual fund investments,” Templeton said in a note to unitholders on Monday.

Last week, the EOW of the Chennai Police registered a first information report (FIR) against FTAMIL and Franklin Templeton Trustee Services for an alleged criminal conspiracy to defraud 300,000 investors by causing wrongful loss to them and unlawful gain to themselves.

The FIR had also named Santosh Das Kamath, MD and chief investment officer, FTAMIL, Sanjay V Sapre, whole time member, FTAMIL, and their directors Jayaram Subramaniam Iyer, Vivek Kudva, RV Subramaniam, and Pradip P Shah, among others.

“Please do not believe unsubstantiated rumours and baseless accusations… Since the business has been carried out in compliance with the applicable laws and all decisions were taken in the best interest of our unit holders, we are confident about the outcome of any true and fair investigation conducted in this regard,” Templeton said, adding that the press release issued by Chennai Financial Markets & Accountability (CFMA) citing the FIR, was replete with various misleading and baseless allegations.

Templeton said that the schemes under winding up had received over Rs 7,184 crore from maturities, prepayments and coupons since April 24: “Four out of the six schemes are already cash positive. These amounts have been generated without the ability to efficiently monetise the portfolio.”

The note said that mutual fund assets of these schemes are held with Sebi-registered custodians and their portfolios retain value according to their respective NAVs, which are published daily based on the valuation of two independent valuation agencies. “The books of the six impacted schemes are regularly audited by internal auditors, statutory auditors, auditors appointed by the regulators and none of them have ever made any observation regarding misutilisation of funds by the schemes,” Templeton said.

The asset manager reiterated that it had acted in the best interest of unitholders and the aim was to return monies of wound-up schemes as soon as possible in accordance with the applicable regulations, and subject to the decision of the Karnataka High Court, which had completed hearing the arguments on this matter.