InvestorQ : Has there been any update on the forensic audit of Templeton mutual fund?
Arya Nanda made post

Has there been any update on the forensic audit of Templeton mutual fund?

Anjana Aiyar answered.
3 months ago

It may be recollected that SEBI had appointed Choksi & Choksi as the forensic auditor to investigate into the Franklin Templeton decision to shut down redemptions in six of its funds leaving over 3 lakh investors in the lurch.

Now based on the report, SEBI has raised some tough questions to Templeton over its sudden decision to announce scheme closure for six of its debt schemes in late Apr-20. As a result an amount of Rs.25,000 crore is stuck in six schemes impacting over 3 lakh investors.

SEBI has asked Templeton to explain steps taken by the fund manager on realizing the liquidity risk. The forensic audit report has highlighted that Templeton schemes faced unusual redemption pressures but did not take timely action.

SEBI, as is the normal process, will give the fund time to submit its explanations. Based on the gravity of the allegations and the nature of steps taken, SEBI may decide on barring the AMC from launching new funds as well as penalties for the same.

Ironically, most of these funds had an asset quality problem in their credit risk exposures. That makes it clear that it was an outcome of bad asset decisions and it now needs to be proved if there was some quid pro quo involved for making such bad decisions.