The Securities and Exchange Board of India (Sebi) has ordered a special audit in the six debt schemes closed by Franklin Templeton. According to a report by The Economic Times, Mumbai-based Chokshi & Chokshi LLP, which advises on tax, accounting, risk, and due diligence among other things, has been assigned to probe into the dealings of six mutual fund schemes that were shut down by Franklin Templeton, one of India’s leading asset managers.
Sebi has asked the firm to submit a report in 30 days. The firm is likely to investigate if there were collusion between the found house and bond-issuing corporates, instances of conflicts of interest of directors or senior officials, and transactions that were prejudicial to the interest of investors in the schemes.
According to LiveMint, the special audit has been ordered after initial assessments pointed to certain investments by the fund houses not meeting mutual fund's model code of conduct norms.
Last week, the Madras High Court had issued a notice to the market regulator seeking an action taken report on refunding investors. Notices were issued to Franklin Templeton Mutual Fund and Sebi by the high court after a petition was filed by an investors group to safeguard nearly Rs 28,000 crore of investors'' money stuck in six schemes shut down by the fund house, according to a statement.
It further said mutual funds and fund managers should be made to answer questions on their choice of investment, and compliance with regulatory and prudential norms, among others.
In April, Franklin Templeton had closed six debt funds, citing redemption pressures and lack of liquidity in the bond markets. Since then, capital market regulator Sebi has asked the fund house on multiple occasions to focus on repaying the investors at the earliest.