Franklin to appeal Sebi ruling

Franklin Templeton plans to appeal a ruling by India's markets regulator after the money manager's local unit was barred for two years from offering new debt funds.

The Securities and Exchange Board of India said it had found "several irregularities" following a probe into Franklin Templeton Asset Management (India) Pvt Ltd's actions last year in winding up six debt funds that held about $4.2 billion of assets. The Sebi also ordered the unit to refund management and advisory fees levied from June 2018 to April 2020 on the frozen funds and imposed a penalty of Rs 5 crore, according to its order on Monday.

The regulator separately barred Franklin's Vivek Kudva and Roopa Kudva from accessing the securities market for one year, and imposed a combined penalty of Rs 7 crore.

"We strongly disagree with the findings in the Sebi order and intend to file an appeal with the Hon'ble Securities Appellate Tribunal," Padmanaban Nair, a spokesman at Franklin Templeton India, wrote in an emailed comment. "We place great emphasis on compliance and believe that we have always acted in the best interest of unitholders and in accordance with regulations."

Franklin Templeton shuttered the funds last year, citing drying up of liquidity in some parts of the nation's corporate bonds market. At the time it was the biggest-ever forced closure of Indian funds and the move and fuelled worries of a renewed wave of withdrawals from similar products. The Sebi tightened rules covering the industry since the closure of the funds, imposing limits on some mutual fund debt investments and mandating stress tests.

The Sebi said it found several irregularities in the running of the debt funds closed by Franklin.