According to reports, on March 16 the Enforcement Directorate (ED) would conduct searches at locations associated with Franklin Templeton Mutual Fund (MF) personnel. According to reports, the searches are already underway in both Mumbai and Chennai. When the business decided in April 2020 to close six debt schemes with €25,000 crore of AUM from 3 lakh investors due to liquidity issues brought on by the pandemic, the Securities and Exchange Board of India (SEBI) submitted a show-cause notice to the company in November 2020. For suspected irregularities in administering six of its debt programmes, the business was eventually instructed to pay 5 crore as penalty, repay over 450 crore received as 22-month investment management and advisory fees, and be barred from establishing any new debt schemes. In addition to returning a large portion of the capital, the corporation has disputed the judgement in several tribunals and courts.
There are now six debt funds managed by the firm, with a total AUM of almost 26,000 crore, and they have opted to close in April of 2020. It said that this was done since their portfolio included illiquid and low-rated securities. Franklin India Low Duration Fund, Franklin India Dynamic Accrual Fund, Franklin India Credit Risk Fund, Franklin India Short Term Income Plan, Franklin India Ultra Short Bond Fund, and Franklin India Income Opportunities Fund are all closed schemes.
Alleged irregularities in the administration of the six debt schemes led to a fine of Rs 5 crore, the return of almost Rs 450 crore received as 22-month investment management and advisory fees, and the prohibition on the company’s establishing any more debt schemes.
In response to these allegations, the Economic Offences Wing (EOW) of the Chennai Police Department filed a First Information Report (FIR). This complaint forms the basis for the ED’s investigation into possible money laundering.
The heads of the asset management firm, Vivek Kudva and Roopa Kudva, were banned from the securities market for a year beginning in 2021 by Sebi. During that time, they were unable to purchase, sell, or otherwise deal in securities in any capacity.
