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'Employees who made investments in the six schemes continue to hold substantial investments in these schemes,' says Sanjay Sapre, President, Franklin Templeton AMC. (Photo: Mint)
'Employees who made investments in the six schemes continue to hold substantial investments in these schemes,' says Sanjay Sapre, President, Franklin Templeton AMC. (Photo: Mint)

'Insider trading reports at Franklin Templeton, misleading' says Sanjay Sapre

From April 24 till September 30, 2020, the total cash received from maturities, pre-payments and coupons across the six schemes stands at 8,262 crore.

Franklin Templeton in its recent note to the investors has suggested that the reports regarding the forensic audit were misleading. The note is written by Sanjay Sapre, President, Franklin Templeton Asset Management (India). In his note, he said the auditors themselves have acknowledged in their original submission to SEBI that the report is subject to modification basis explanations and responses to be provided by Franklin Templeton. "The reports regarding the findings of the forensic audit/inspection are misleading. We believe that it is improper to make any publication regarding the Forensic audit/inspection report as the matter is under the consideration of the Hon’ble Karnataka High Court," said Sanjay Sapre.

Forensic audit conducted by SEBI observed that some Franklin Templeton officials redeemed investments before winding up. Also that the AMC did not exercise put options in papers despite ratings downgrade.

"As we have previously clarified, employees who made investments in the six schemes continue to hold substantial investments in these schemes. The decision to exercise, or not to exercise a “put" option rests with the investment management team. The team takes various factors and options into account in order to maximize recovery of investment proceeds when making such an investment related decision and exercising a put is not the only available option," says Sapre in his note to the investors.

Sapre added that some media reports specifically call out investments made in certain issuers where the AMC did not exercise a put–option. However, these reports ignore the fact that Franklin Templeton has already initiated legal recovery proceedings in the case of some of these issuers.

Sapre requested investors not to be swayed by unverified or speculative reports. "We have followed and continue to follow due process both in making investment decisions and with regard to the winding up of the funds."

From April 24 till September 30, 2020, the total cash received from maturities, pre-payments and coupons across the six schemes stands at 8,262 crore. Part of this amount has been utilized to repay borrowings and post repayment, as of September 30, 2020, the AMC has 5,084 crore available for distribution to unitholders in four cash positive schemes (Franklin India Ultra Short Bond Fund, Franklin India Dynamic Accrual Fund, Franklin India Low Duration Fund, Franklin India Credit Risk Fund), subject to fund running expenses.

"The cash flows received so far are without the ability to efficiently monetize assets, which will only be possible after successfully completing the e-voting process," says the note.

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