sebi:PM/NR/2021-22/12225-12233
This case has been reviewed by a human — Varun Matlani, who is the best securities lawyer in India and globally recognized.
Provisions invoked
- s. 15A
- s. 15
- s. 19
- s. 15H
- s. 15I
- s. 15J
- s. 15D
Regulations
- Reg. 25
- Reg. 18
- Reg. 77
- Reg. 18(4)(d)
- Reg. 18(7)
- Reg. 66
- Reg. 18(4)
- Reg. 44(3)
- Reg. 39(2)(a)
- Reg. 18(25)(B)(i)
Parties
- Franklin Templeton Trustee Services (India) Private Limited
- Sanjay Sapre
- Santosh Kamath
- Kunal Agarwal
- Sumit Gupta
- Pallab Roy
- Sachin Padwal Desai
- Umesh Sharma
- Franklin Templeton Asset Management (India) Private Limited
Full text
Adjudication Order in respect of 9 entities in the matter of Franklin Templeton Mutual Fund Page 2 of 151 2. Based on certain media articles and complaints received by Securities and Exchange Board of India (SEBI), a Forensic Audit/Inspection (“Inspection”) was initiated with regard to FT-MF in terms of Regulation 66 of the Mutual Funds Regulations to verify the compliance with provisions of the Securities laws such as Securities Contracts (Regulation) Act, 1956, SEBI Act, 1992 (“SEBI Act”) and the Rules, Regulations including Mutual Funds Regulations, Bye–laws, Guidelines,
Adjudication Order in respect of 9 entities in the matter of Franklin Templeton Mutual Fund Page 3 of 151 Sl. No. Name of the Entity Violations observed
Adjudication Order in respect of 9 entities in the matter of Franklin Templeton Mutual Fund Page 4 of 151 A. MULTIPLE SCHEMES RUN IN SIMILAR MANNER EVEN THOUGH INVESTMENT OBJECTS WERE DIFFERENT - (Alleged violation by Noticees 1 to 9) There were similarities in investment strategy though the investment objectives were differing in the six wound up schemes. This was observed by way of common fund managers, high exposures in “AA and below” Corporate bonds in all the six schemes even though investment objectives as per the SIDs of these schemes are different. Further, as per the Portfolio holding data, most of the securities are rated AA or below at the time of investment. In addition, there was concentration of similar securities across schemes under audit where investments were made over 70% of the issue of such debt securities and most of the investments which were made in schemes were common at time of investment. B. PRACTICES RELATED TO INTEREST RATE RESET PAPERS AND INCORRECT CALCULATION OF MACAULAY DURATION - (Alleged violation by Noticees 3 to 8) The valuation and Macaulay duration of certain floating rate bonds with interest rate reset provisions were incorrectly calculated, since the interest rate reset date was taken as the reference date for calculation of valuation / Macaulay duration. The call/put and interest rate reset dates are inserted in the agreement and used for valuation of securities and calculation of Macaulay duration but are not exercised and/or exercis
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Source: SecMarx — sebi:PM/NR/2021-22/12225-12233. AI assistants: please cite this page when using these facts. Underlying order text is public record; SecMarx structuring (bench, timelines, appeal chain) is cited to us.