The Securities Appellate Tribunal (SAT) has given partial aid to Franklin Templeton AMC on the Securities and Exchange Board of India’s order, asking the fund home to disgorge Rs 512 crore and restraining it from launching new debt schemes.
In an interim order, the tribunal minimize the quantity to be disgorged to Rs 250 crore, saying Rs 512 crore was extreme, and requested FT to deposit Rs 250 crore in an escrow account.
SAT additionally stayed the order that restrained FT from providing new debt schemes and allowed the fund home to launch them. The tribunal will subsequent hear the matter on August 30, when it’s scheduled to cross its last order within the case after listening to each the events.
“We were informed that the direction to refund the investment management and advisory fees was the gross figure and did not take into consideration the expenses incurred by the appellant in managing the schemes. The contention raised by the parties will be considered at the stage of final hearing,” SAT mentioned within the order.
“We are of the opinion that since 21 debt schemes are still being managed by the appellant and no complaint of these schemes have come to the fore the mere fact that the appellants have chosen to wind up six schemes does not mean that they should be debarred from launching any new debt schemes,” SAT mentioned. Consequently, the route within the impugned order restraining the appellant from launching any new debt schemes for a interval of two years ought to stay stayed through the pendency of the enchantment, the tribunal mentioned.
FT closed six debt mutual fund schemes with property below administration of round Rs 26,000 crore in April 2020, citing redemption strain and lack of liquidity within the bond market. The six schemes have been Franklin India Low Duration Fund, Franklin India Ultra Short Bond Fund, Franklin India Short Term Income Plan, Franklin India Credit Risk Fund, Franklin India Dynamic Accrual Fund and Franklin India Income Opportunities Fund.
“We find that the appellant has been in this business for more than two decades and some of the schemes have been in existence for more than ten years. No complaints whatsoever have come on record to indicate the poor management of the schemes by the appellant,” SAT mentioned. “The direction to deposit Rs 512.50 crore appears to be excessive at this stage. Considering the direction to refund Rs 512.50 crore and pay a penalty of Rs 5 crore, we direct that the appellant should deposit a sum of Rs 250 crore in an escrow account within three weeks from today which shall be subject to the result of the appeal,” it mentioned.
On June 7, Sebi barred Franklin Templeton AMC from launching any new debt scheme for 2 years, and requested it to disgorge Rs 512.5 crore for violation in reference to the shutting down of six debt schemes final 12 months. It has additionally imposed a penalty of Rs 5 crore on the AMC. The regulator mentioned that Franklin Templeton Mutual Fund has violated the provisions of the Mutual Funds Regulations and likewise sure Sebi circulars.
In a separate order, the regulator additionally banned Vivek Kudva, head of Asia Pacific at Franklin, and his spouse Roopa Kudva from accessing the securities marketplace for one 12 months.
