The fund house was commenting on an FIR registered by the Economic Offences Wing (EOW) of the Chennai police against the fund house and its top officials.
Franklin Templeton said that the winding up of the schemes was forced by the redemption pressures and lack of liquidity in the bond market.
Franklin Templeton Mutual Fund on Monday said the Karnataka High Court had completed hearing the arguments on its six shuttered debt schemes and the fund house was awaiting a judgment from the HC. In a letter, Sanjay Sapre, president of Franklin Templeton Asset Management (India), urged investors not to believe in un-substantiated rumours.
The fund house was commenting on an FIR registered by the Economic Offences Wing (EOW) of the Chennai police against the fund house and its top officials. “While we cannot comment on the FIR as we have not seen its contents, it may be noted that filing of an FIR is simply the preliminary step in an investigation. Since the business has been carried out in compliance with the applicable laws and all decisions were taken in the best interest of our unit-holders, we are confident about the outcome of any true and fair investigation conducted in this regard,” said Sapre in his letter.
It also alleged that the press release issued by Chennai Financial Markets and Accountability (CFMA), citing the FIR, was replete with various misleading and baseless allegations, besides being inappropriate, as the matter was currently sub judice. On April 23, six debt schemes, collectively worth Rs 25,800 crore, were wound up by Franklin Templeton MF due to the severe market dislocation and illiquidity caused by the Covid-19 pandemic.
“We are not aware of the antecedents of CFMA and as admitted by them in their original complaint, none of their members were unit-holders in the six impacted schemes,” added Sapre. The letter also stated that, “CFMA had previously made similar misleading and baseless allegations against us and the industry, for example, suggesting that unit-holders in the scheme may face up to an 80% haircut, or that winding up of schemes by Franklin Templeton will lead to substantial losses for unit-holders across all debt schemes in the industry.”
Since April 24, the shuttered debt schemes have received over Rs 7,184 crore from maturities, pre-payments, and coupons and four out of the six schemes are already cash positive.