The market regulator SEBI has questioned the investment decision of the six schemes of Franklin Templeton Mutual Fund that were wound up in April 2020 and asked for its response in this respect. The regulator has also sought the views of the fund house to explain the issues raised in the forensic audit report. SEBI has appointed the audit firm Chokshi & Chokshi to conduct a forensic audit on any regulatory violation by Franklin Templeton and to give a report as to whether the winding up process was done in a fair and transparent manner.
The forensic audit report pointed out certain anomalies in the investment strategies. Based on these findings, SEBI wants to understand the investment strategies of the fund house. The regulator also wants to know the reasons for the Franklin Templeton’s investment in several firms which were financially stressed and not seemed to pay back the investment money.
In this backdrop, the fund house has submitted a detailed explanation to the regulator recently. Franklin is learnt to have told SEBI that its investment practices are similar to that of other firms in the Mutual Fund industry and it has faced investment issues with only a few firms. SEBI is said to be examining all the replies given by the fund house and will soon decide upon the future course of action.
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