SEBI has imposed a fine of Rs.5 crore on Franklin Templeton Mutual Fund.
The market regulator has found that the fund house has violated five regulatory norms:
- Scheme categorization (by replicating high risk strategy across several schemes)
- Calculation of Macaulay duration (by pushing long term papers into short duration schemes)
- Non exercise of exit option in the face of emerging liquidity crisis
- Securities valuation practices
- Risk management practices and investment related due diligence
The regulator has given 45 days to the fund house to pay the penalty amount.
The market regulator has also asked the fund house to refund fund management fees charged between FY 2018 and FY 2020. With this, the fund house will have to refund management and advisory fees of up to Rs.512 crore including 12% simple interest to unitholders of the wound up schemes. The fund house will have to pay this amount within 21 days.
Further, SEBI has also barred the fund house from launching new debt schemes for two years.
In another order, SEBI has imposed fine of Rs.4 crore and Rs.3 crore on Vivek Kudva and Roopa Kudva, respectively. The market regulator has barred both Vivek Kudva and Roopa Kudva from securities market for one year year.
Franklin Templeton Mutual Fund will approach the Securities Appellate Tribunal against the SEBI order.
In another development, Vivek Kudva, Head of Asia Pacific Distribution, Franklin Templeton said that he will also appeal before SAT against SEBI order.