Sebi didn’t give nod to shut Franklin MFs

According to public statements by Franklin, the asset management company (AMC) had claimed that the regulator was informed about the winding up of schemes at every step when it shuttered the debt schemes on April 23 citing severe illiquidity and redemption pressures due to coronavirus pandemic.

Franklin Templeton India did not take any approval from the Securities and Exchange Board of India (Sebi) before shutting down six of its struggling debt schemes, according to the markets regulator’s response to a recent right to information (RTI) application.

The RTI query was filed by the Khambatta family, an investor in the Franklin Templeton funds and petitioners in the Gujarat high court case that contended that the asset manager’s decision to wind up the schemes required the consent of investors.

According to public statements by Franklin, the asset management company (AMC) had claimed that the regulator was informed about the winding up of schemes at every step when it shuttered the debt schemes on April 23 citing severe illiquidity and redemption pressures due to coronavirus pandemic.

The RTI query was filed by the Khambatta family, an investor in the Franklin Templeton funds and petitioners in the Gujarat high court case that contended that the asset manager’s decision to wind up the schemes required the consent of investors.

The petition led to a stay on the winding-up process on June 8. In the RTI query, the family said Franklin Templeton had claimed before the Gujarat high court and in a special leave petition in Supreme Court that the winding up of the schemes was done after taking appropriate permissions from Sebi. The family sought information pertaining to the date on which the permission for winding up of the schemes was applied for, the date on which it was granted and documentary evidence of any deliberation on the permission. “Sebi has not granted any such permission to Franklin to wind up the said schemes,” it said in the RTI response in the first week of August. Mint has reviewed both the RTI query and its response.

“We have not made any statement before the hon’ble high court of Gujarat or the hon’ble Supreme Court about Sebi granting us prior permission to wind up these six schemes. As clearly stated in all our communications, the decision to wind up these schemes was taken in accordance with regulation 39(2)(a),” said a spokesperson for Franklin Templeton in an emailed statement.

Neil Borate in Mumbai contributed to the story.