Investors demand reopening of schemes Franklin is winding up

Mumbai: Investors in Franklin Templeton’s debt schemes that are in the process of being wound up have sent a legal notice to market regulator Securities and Exchange Board of India (Sebi) demanding necessary directions to be issued to Franklin Templeton Trustee Services (FTTS) to re-open the schemes until the regulatory framework has been put in place.

Investors have also demanded that Sebi should appoint an administrator to take over Franklin Templeton Asset Management Company (FTAMC) and FTTS and evolve a mechanism for ensuring timely payment of the dues of the unitholders.

Several Delhi-based investors including Kaj Associates LLP, Ultra Walls and Floors LLP, Sanyam Jain and Sarika Mittal among others through their advocate Puneet Jain in a legal notice said that Sebi should direct FTTS to seek approval of the unitholders to wind up the schemes as required under Sebi regulations and only after it is granted should a fresh meeting be called to deliberate and approve further steps in the process of winding up.

They also demanded that the fund house be debarred from functioning for any of the six schemes as they are in default, and to restrain Kotak Mahindra Bank or any other agency appointed by the fund house from acting in any manner for winding up.

Investors have accused Sebi of “deliberately turning a blind eye to patent and blatant violations” by Franklin Templeton AMC in managing its debt funds which has resulted in unprecedented closure of six of them.

“My clients have been compelled and constrained to issue the present notice due to a complete apathy of the Sebi to look after investors’ interest and is in fact has been bending over backwards to embank and insulate FT from actions by investors when as a regulator, with omnibus powers, it ought to have acted pre-emptively against it with promptitude,” said the legal notice.

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“It is strange that despite knowing that FT had actually defaulted, but instead of acting against FT and stopping it from operating other schemes, Sebi has extended a long rope which has been misused by it to defraud more investors” the notice said. An email query sent to Sebi did not elicit any response until press time.



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