Franklin Templeton issues 'unconditional apology' to SEBI on global chief's comments

Franklin Templeton has issued an "unconditional apology" to capital market regulator Securities Exchange Board of India (SEBI) over its global chief's comments that regulatory tightening was among the factors which contributed towards closing its debt schemes. "We deeply regret any unintended slight this may have caused to the esteemed offices of Sebi whom we have always held in the highest regard and unconditionally apologise for the same," Franklin Templeton AMC, the Indian arm of the global asset manager said in a letter.

The fund house said the remarks made by Jenny Johnson, president and CEO, Franklin Templeton during their quarterly earnings call were quoted "out of context" by media outlets. "Unfortunately, SEBI came out with new guidelines saying that any investments in unlisted instruments in funds can't have more than 10 percent in a fund, and you can't trade them. So that orphaned about a third of our fund there," Jenny Johnson, President and CEO, Franklin Templeton, had said during the analysts call on Wednesday. On Thursday, SEBI said that it has advised Franklin Templeton Mutual Fund (FT) to focus on returning money to investors, in the context of them winding up six of their debt schemes.

Also read: Where 6 Franklin Templeton funds got stuck; recovery tougher

The fund house cited "severe market dislocation" due to coronavirus lockdown as key reason which negatively impacted liquidity for the papers rated below AAA, along with increased redemptions during the period.

Franklin Templeton Mutual Fund last month decided to close down its six fixed-income debt schemes. The move resulted in locking in investor wealth worth Rs 30,800 crore. The asset management company (AMC) had then cited redemption pressure and lack of liquidity in bond markets to voluntarily wind down the schemes effective April 23, 2020. The six schemes include Franklin India Low Duration Fund, Franklin India Dynamic Accrual Fund, Franklin India Credit Risk Fund, Franklin India Short Term Income Plan, Franklin India Ultra Short Bond Fund and Franklin India Income Opportunities Fund.

Also read: Franklin Templeton Debt Fund crisis: When and how much money will investors get back