The Securities and Exchange Board of India (Sebi) has issued show-cause notices to Franklin Templeton Asset Management Company (AMC), based on findings of a forensic audit report, according to people with knowledge of the matter.
In April last year, Sebi had ordered the audit after the fund house wound up six debt mutual fund schemes.
The regulator has initiated legal proceedings under Section 11B of the Sebi Act, against Vivek Kudva, head of Asia Pacific (APAC) for Franklin Templeton, his wife Roopa Kudva, managing director at Omidyar Network India, and his mother.
It empowers the regulator to bar an entity from the securities market and order disgorgement of profits.
Further, it has initiated adjudication proceedings against the entities, under which it can impose monetary penalties for alleged violations of the Prohibition of Fraudulent and Unfair Trade Practices and mutual fund regulations.Franklin Templeton told ET that detailed responses to the show- cause notices had been sent to Sebi. “None of the key persons have redeemed any units post the trustees taking the in-principle decision to wind-up the schemes,” said a company spokesperson in an email. “Schemes under winding up continue to have significant investment from employees and management of Franklin Templeton. All redemption applications submitted by unit holders until April 23, 2020, were processed in the normal course of business. Our interests remain aligned with those of our investors.”
However, the regulator didn’t respond to queries.