Case filing from CFMA

By vig, December 03 2020 10:36 AM

Thanks CFMA for putting up a fight for the investors.

Nice to see the case details in the supreme court :

https://main.sci.gov.in/php/case_status/case_status_process.php?d_no=26162&d_yr=2020

All the best! Truth will triumph Always !

Franklin AUM will melt and investors will surely pull out once after this whole episode and judgement

Comments(10)
By Pradeep, January 31 2021 09:39 AM
The focus now has to be on retrieving the maximum amount of money with minimum amount of delay. there is no question of allowing the AMC to continue to hold the funds when they have already expressed their inability/ reluctance to do so. CFMA is only musddying the waters and causing inordinate delay in allowing a resolution. I would appreciate if you actually think of the small investor benefit rather than trying to squeeze the AMC through a Class Action suit which in itself presents the opportunity for several unethical practices to flourish. If you want to focus on anything, then do so on ensuring that the winding up process is as effecient and transparently done by whoever is appointed to undertake the procedure. I dread to think what will happen to the small investor if there is a NO vote and then funds once again reopen for redemption.

By sameer, January 22 2021 03:26 PM
The Supreme Court of this country has also agreed not to divulge the details of the forensic audit report with unitholders. This is biggest surprise and also agonizing for the investors.

By VENUGOPAL MR, January 21 2021 02:02 PM
As per FT, they are happily informing the public that they have received more than 96% Yes votes. However, the fact is that the investors are had no option for getting back their hard earned money and thus most of them would have caste their votes as YES. The following issues are yet to be answered [01] Whether the Fund Manager has exercised due diligence with regard to investment of the public money and if yes, why only this fund house have to take the immediate action of closing down the schemes and none of the other Fund houses who are also operating under the same circumstances has not resorted closing down. [02] An investor do the investment with a time horizon and manage his tax efficiently. Now the fund house will be over a period of time returning the money which they had collected who will bear the Capital gain losses or taxes or other losses. Whether the Fund house will be made accountable for their lapses? [03] No visible action is taken by SEBI to reinstate confidence in the mind of the investors and no action was initiated by them to avoid repeating the same mistake by other fund houses in future [not seen anything in public domain]. While dealing with public money,one has to exercise utmost care and diligence and the regulatory authorities who are keeping a closed eye on the erring fund houses needs to pulled up by Honorable Courts [which is the only hope for the investors]. CFMA is doing a wonderful job in highlighting the issues of the investors and all the best for their efforts.

By Col Mahesh Ramachandran, January 15 2021 12:03 PM
Surely CFMA is doing a great job in exposing the scoundrels masquerading as FTMF trustees. The SC decision ordering a vote was baffling and this coupled with the false assurances of FTMF would have prompted most investors to Vote YESM due to sheer helplessness. Hence SC should disregard the voting result and order FTMF to: 1. Distribute all the cash positive amount to their investors in proportion to units held. 2. Set a timeline for refunding all the investments. 3. Order a SC monitored probe into the shady dealings of FTMF - specifically to look into redemptions by trustees or their relatives in the period Jan to Apr 2020. 4. Revoke the passports of all trustees till the money is refunded to the retail investors.

By R Madhushree, December 20 2020 11:34 PM
Hi, I am an affected investor having unit holdings in FRANKLIN INDIA SHORT TERM INCOME PLAN - (GROWTH) and FRANKLIN INDIA CREDIT RISK FUND (GROWTH). The Supreme Court does not seem to have applied its mind in permitting Franklin Templeton Mutual Fund to go ahead with conducting the voting of Unitholders to decide about winding up the six shuttered schemes. The fact is that SEBI had appointed the Chartered Accountant firm Choksi & Choksi to conduct a forensic audit to ascertain if due process and procedure were adhered by the Fund Managers of Franklin Templeton Mutual Fund in accordance with the SEBI Mutual Fund Regulations. As SEBI is expected to act in the utmost interest of the Unitholders the contents of this Forensic Report has a very important bearing on deciding whether to vote in favour of winding up the schemes or to vote against the winding up of the schemes. In the case of any publicly listed company the audited accounts are circulated prior to the AGM and the shareholders have the opportunity to study the accounts and decide the course of voting at the meeting on the proposed resolutions based on the audited accounts. Similarly, in the case of the Franklin Templeton Mutual Fund too, the Forensic Audit Report must be circulated to the Unitholders to enable them take a considered and informed decision. Otherwise, any voting without reading and considering the Forensic Report will only be a BLIND VOTING that could be prejudicial to the interest of the Unitholders. There could be a case where the Forensic Report points out malfeasance on the part of Franklin Templeton Mutual Fund and its Fund Managers, the Unitholders may want the six shuttered schemes to continue by being managed by some other Fund Manager. This could only be decided by the Unitholders if they partake in the Voting based on their reading and understanding of the Forensic Report. CFMA could look into this and file a Special Leave Petition in the Supreme Court asking it to direct Franklin Templeton Mutual Fund to first circulate the Forensic Audit Report to all the affected Unitholders and then conduct the Voting and Meeting to decide the further course of action. Otherwise, there is no purpose in submitting the Forensic Audit Report in a sealed cover only to the Supreme Court, which would be taken up after the Voting as any malfeasance on the part of Franklin Templeton Mutual Fund could get swept under the carpet to protect both Franklin Templeton Mutual Fund and SEBI. Further, as stakeholders and interested parties, the Unitholders have absolute privity and entitled to the copy of the Forensic Audit Report. Thanks, R Madhushree

By Vasudevan, December 18 2020 10:43 PM
Sharing thoughts for discussion , there is an established process from SEBI for which MF has allowed creation of segregated portfolio in mutual fund schemes in order to ensure fair treatment to all investors in case of a credit event and to deal with liquidity risk ... FT is to just follow as they had done for Vodafone payment in Ultra short bond and settled as they receive ..... what-so ever collected till date should be available for all to with-draw ... FT to follow the stipulated SEBI rule ...

By Shrikant Khadilkar, December 17 2020 09:58 AM
CFMA is mixing two issues. Does CFMA has an answer on what would happen if the voting result is a NO? Under what clause will SC not let the fund open? So far we have seen that courts only go by the book. The book states that if a fund is not wound up, then it is re-open. If SC itself is asking for a vote from the investors and investors vote NO (as advised by CFMA), what makes CFMA think that SC will prevent the fund from opening up for redemptions? Even if SC prevents the fund from opening up for redemptions, what is the next step of CFMA? We have seen that at the end of a tenuous 7 month litigation all courts decided was 'Unitholders vote is needed'. Now if Unitholders have voted a NO and SC is asking for a stay - what is the way out? The only way out is that a litigation is held. What is the litigation for? Agree that FT must have taken wrong decisions, but taking wrong decisions is not necessarily illegal. If FT is not found doing anything wrong post that, then what would be the state of the funds? Voters are saying NO for winding up , SC is saying NO for redemptions, CFMA is unable to prove anything? In the end - it would either opening the funds for redemptions which is a fire sale or winding up. Isn't winding up now itself a better option? What is stopping CFMA from continuing the litigation after winding up? After thinking these it seems that CFMA asking investors to vote no is more favorable to CFMA than investors!!!

By Saket, December 09 2020 03:04 PM
I think CFMA is mixing two issues a) FT fund managers being incompetent with b) How to protect unitholders principle + whatever return possible If the fund manager believes that they can not manage the invested money in future to the best outcomes and want to return the money to unitholders there can not be much argument against that. If fund had allowed for redemption to continue, like any bank before the era of lender of last resort (central banks), the scheme/fund would have failed miserably as it is impossible to redeem large % of any debt scheme. Fund managers could have made risky investment choices that led to this and they could be punished for that by loss of reputation or otherwise. However in this case if my understanding is correct primary issue was Vodafone debt, which can not be termed as reckless investment though in hindsight could be termed as less than diligent. There is no alternative proposal from CFMA or anyone else on what should be done that keeps these schemes running and that would protect investor money as well as liquidity aspect. Debt investments are supposed to be liquid and in my view best course is for these schemes is to returned already matured funds to unitholders and continue to return money as and when the portfolio matures. I strongly disagree with position made up by CFMA which is trying to sway investors towards a risky and uncharted path, that too without any specific proposal on how CFMA thinks redemption flow damaging NAV/ due to debt fire sale will be prevented in case fund is made open again from current closed position.

By Anil Gupta, December 05 2020 11:20 AM
Hon'ble Supreme Court's order asking Franklin Templeton to seek consent of nearly 3.5 lakh investors is going to lead to extreme confusion. The emphasis of the case should have been more on protecting investor capital besides fighting for or against the winding up. In the present situation it is a win win for Franklin Templeton, they are getting away scot-free for their misdeeds. Before going to unit holders for consent for closure of schemes, Franklin Templeton should clarify how it is going to protect the investor capital in case; a) Consent for winding up is not given. We all are aware that in this scenario there will be a huge rush for redemption leading to complete erosion of investor capital. b)In case winding up is approved , Franklin should lay down its return plan clearly before the court. In either case capital protection is of prime importance. Further, I am unable to understand why this differentiation between 'Small' and 'Big' investor, all investors should be considered equal.

By Anil Gupta, December 05 2020 10:38 AM
Hon'ble Supreme Court's order asking Franklin Templeton to seek consent of nearly 3.5 lakh investors is going to lead to extreme confusion. The emphasis of the case should have been more on protecting investor capital besides fighting for or against the winding up. In the present situation it is a win win for Franklin Templeton, they are getting away scot-free for their misdeeds. Before going to unit holders for consent for closure of schemes, Franklin Templeton should clarify how it is going to protect the investor capital in case; a) Consent for winding up is not given. We all are aware that in this scenario there will be a huge rush for redemption leading to complete erosion of investor capital. b)In case winding up is approved , Franklin should lay down its return plan clearly before the court. In either case capital protection is of prime importance. Further, I am unable to understand why we are differentiating between 'Small' & 'Big' investor, all investors should be considered equal.