Chennai Investor Group CFMA Accuses AMFI of Protecting Franklin Templeton MF against EOW FIR
IANS 01 October 2020
The Chennai Financial Markets and Accountability (CFMA), an investor group, on Thursday accused the Association of Mutual Funds in India (AMFI), a nodal association of mutual funds across India, of protecting Franklin Templeton Mutual Fund (FTMF) and its senior management against an FIR (first information report) registered with the economic offences wing (EOW) of Chennai Police.
The CFMA alleged that the AMFI, the body that claims to protect and promote the interests of mutual funds and their unitholders, has been a mute spectator ever since the FTMF scam ballooned to a whopping Rs28,000 crore broke in April this year, and has now suddenly rushed to defend the indefensible fund house by calling an FIR registered against it as 'dangerous and undesirable precedent'.
AMFI has urged market regulator Securities and Exchange Board of India (SEBI) to intervene in the matter since it has 'vast jurisdiction containing administrative, civil and penal domains' and prevent the case from 'getting translated into a criminal investigation'. Notably, it further requested the SEBI to exercise its statutory powers to shield one of its members—FTMF—and to insulate the MF industry from any undesirable and unwarranted precedent.
By covering up the misdeeds of FTMF's and not saying even a word in favour of the unitholders, the CFMA said, AMFI has failed to address the grievances of investors aggrieved by the freezing of six of the debt schemes of FTMF.
According to the CFMA, the AMFI is undermining a lawfully registered FIR against FTMF when it is not even privy to either the forensic audit report or the internal management of FTMF unless its president Sanjay Sapre, who is on the Board of Association of National Exchanges of Members of India, has briefed the AMFI with sketchy details.
It noted that the AMFI, which is acting against the interests of FTFM unitholders, wants SEBI being the market regulator to govern and execute all actions, including criminal cases, whereas it is well known that such powers rest with the police to take cognizance of, and protect the rights of citizens who complain of financial loss by way of fraud and criminal breach of trust.
The CFMA alleged that the AMFI is deliberately feigning ignorance about the fact that banks, which are regulated by the RBI, get prosecuted by law enforcement agencies like the EOW or CBI in case of criminal cases involving the loss to depositors, as in the case of Yes Bank, DFHI, PMC Bank in recent times and also in UTI Mutual Fund some years back.
The investor group pointed out that the AMFI is turning a blind eye to the fact that the FIR was registered in full fairness and transparency. The matter was discussed in the Karnataka High Court and the EOW, Chennai, was given enough time to investigate the matter following which it found merit in registering the FIR. By objecting to the FIR, FTMF is casting aspersions on the views of the Karnataka High Court and the authority of the EOW as well.
Interestingly, it highlighted, the AMFI has given clean chit to FTFM without even waiting for forensic report, police investigation and the Karnataka High Court, the way the then board of ICICI Bank gave clean chit to its erstwhile MD and CEO Chanda Kochhar.
The CFMA expressed its concern over the AMFI's complete lack of empathy towards three lakh investors whose over Rs28,000 crore is stuck amidst fears of a head-cut of 80% which means a loss of Rs20,000 crore. In doing so, the AMFI is going against its very core objective of being a self-regulatory organisation, it said adding that the performance of bodies like the AMFI itself needs closer examination to stop the recurrence of risks like FTMF.
With so much power to protect the interests of the investors, it pointed out, SEBI and AMFI are unfortunately, seen protecting mutual funds, their employees, the board of asset management companies and trustees instead of the unitholders. CFMA suggested that AMFI should not obstruct the process of law in a sub-judice matter and also not use the SEBI to influence the judiciary.
Meanwhile, CFMA is contemplating filing a class-action suit against the global fund house for recovery of money and to claim damages, and has also urged all aggrieved investors to come together for filing the class-action suit.
Disclaimer: Information, facts or opinions expressed in this news article are presented as sourced from IANS and do not reflect views of Moneylife and hence Moneylife is not responsible or liable for the same. As a source and news provider, IANS is responsible for accuracy, completeness, suitability and validity of any information in this article.
Ramesh Popat
1 year ago
mutual fund sahi NAHI hai!
let such many more incidents happen till
mf amu reduces to half, at least!
1 year ago
I completely agree....... Why is the financial sector being safeguarded behind the veil of SEBI laws which are always against investor interest.
The group seeking an FIR are doing so legally and they have a right to do FIR is the first such move to seek justice and penalise the corrupt.
This is not about troubling the office bearers, but also about sending a strong message to those who indulge in financial malpractice. FIR should be lodged.
1 year ago
most of the ceo of fund houses are indulging in unethical practices. amfi is total waste .india all regulators are waste of time for public. let the amc should reduce salary and perks by half for ceo and fund managers,they are busy giving interview in tv.this is the main reason indian public not intereted in mutual funds.
Replied to ganesanjaicare comment 1 year ago
Show Shaw giri has increased.Money is wasted in 5 star hotels.
Now theses agencies are fighting who will safeguard investors interest.We r Sr Citizen.
Replied to ganesanjaicare comment 1 year ago
Very correct.Without experiance these college pass out are getting Crores .There should be check on salary.
1 year ago
Since years I am saying in India regulators are the real enemy of public as investors for SEBI customer for RBI.If one goes in detail investigation one find regulators support brokers by SEBI, banker's by RBI Insurers by IRDA are few examples.Public money is wasted on regulators.
1 year ago
Sachin Tendulkar says MF is a risk but non could imagine he's put so many at risk at once, though 28k Crs still is a small figure exposed
Replied to khhk1628 comment 1 year ago
Check facts please. I invested a large amount in FT Ultra Short Bond (one of the closed schemes) and got 100% back in instalments WITH interest. But for the litigation, independent Value Research reports that investors in at least one other fund would have received 100% plus some interest. 80% haircut is a myth which is far from reality.
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