Franklin Templeton roasted by SEBI 🙄

What happened—mutual fund issuer Franklin Templeton was asked to refund more than ₹500 crores to customers by SEBI for abruptly shutting down a few mutual fund schemes, without giving customers a notice.

The problem—last year, Franklin suddenly withdrew 6 debt schemes from the market after the investing company got scared of potential defaults and illiquidity from COVID induced economic fall out.

This led to a flurry of withdrawals and chaos in the company’s other schemes. Investors lost money, court cases followed, and the regulators had to step in, who eventually ruled that FT had failed to provide investors exit options, while intentionally piling onto “heavy risk” asset classes without restraint.

SEBI’s tone was pretty damning, and FT has also been barred from issuing any more debt mutual funds for 2 years. Besides, a former director and his wife were personally fined ₹7 crores. Message loud and clear for the rest of the legacy money management industry.