Franklin Templeton MF Repaid 'Zero to Minuscule' Amount to Unit-holders of 2 Shut Schemes: CFMA
An error in the article comparing debt MF with Bank FDs came from CFMA press release via IANS. We have removed the error now.
 
The Chennai Financial Markets and Accountability (CFMA), an investor protection organisation, said on Wednesday that Franklin Templeton Mutual Fund (FTMF) has failed to honour its commitment made before the Supreme Court to distribute Rs9,122 crore to all the unit-holders of its six closed schemes, and paid 'zero to minuscule' amount to the investors of two shut schemes.
 
Out of the distributable amount, CFMA noted, FTMF has not paid a single paisa to the hapless unit-holders of Franklin India Income Opportunities Fund (FIIOF) and paid a meagre 8 per cent to the unit-holders of Franklin India Short Term Income Plan (FISTIP), forcing a write-off of 100% and 92%, respectively, on them.
 
The investor body alleged that the unit-holders of these two funds have borne the major burnt and are forced to take massive haircuts, contrary to repeated assurances from FTMF.
 
 
(Source: Franklin Templeton)
 
The CFMA pointed out that the impression was given to the Supreme Court by the FTMF that Rs9,122 crore out of Rs26,670 crore will be distributed among three lakh unit-holders of the six shut schemes, which constitutes 32% of the total amount, and the remaining amount would be paid later.
 
However, the fact that the unit-holders of FIIOF and FISTIP will not be receiving the funds was never disclosed before the apex court.
 
In the first tranche of pay-out, the unit-holders of FIIOF and FISTIP were being forced to take a haircut of 100% and 92%, respectively, instead of getting an average 32%.
 
"The data on the FTMF website clearly highlights that lies and truth cannot be hidden for long and strict action should be initiated against FTMF for not disclosing the correct facts," the investor body suggested.
 
The zero to negligible repayment to the unit-holders of the two schemes clearly indicated how badly the funds were managed. Considering the overall poor investment decisions and bad quality of assets of the six schemes, the CFMA reiterated that three lakh unit-holders will have to bear a minimum haircut of Rs15,000 crore on their principal amount and described it as a 'Black Swan' event for the entire mutual fund industry, which will set a precedent for others to follow.
 
 
(Source: Franklin Templeton)
 
 
Mutual funds are managed by professional fund managers and, therefore, they are expected to perform better than the benchmark. In case of an increase in bond yield, the returns to unit-holders should be more than the benchmark and in case of falling yields, the returns to unit-holders should fall less than the respective benchmark.
 
According to the CFMA, it is a wake-up call for market regulator SEBI to investigate the very basis of the distribution mechanism adopted by Franklin Templeton. FTMF secured consent for e-voting from all its unit-holders but has repaid a minuscule amount to the unit-holders of the four shut schemes, while repaying zero to negligible amount to the remaining two schemes.
 
In the past, the CFMA raised serious concerns about the functioning of SEBI as it failed in its fiduciary duty to protect the interest of its unit-holders after the FTMF shut its six debt schemes, leaving three lakh unit-holders in the lurch.
 
Despite being a sector regulator with huge powers, including penal provisions, the SEBI did not act to ensure the protection of unit-holders' investments, shrugging off its responsibility and allowing FTMF to use Covid-19 as an excuse for its fund mismanagement and to escape from its criminality, it added.
 
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.
 
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    COMMENTS

    MDT

    2 weeks ago

    This is the first time we are seeing so-called investors wanting us to PRAISE Franklin Templeton for distributing or at least giving back some amounts of their money to them. Nothing displays motivation and dubious intention than these comments. Here are some facts. Former chief election commissioner TS Krishnamurthy was appointed by SEBI to ensure proper voting, at the request of Midas Touch Investor Association, which has a stellar record of fighting for and getting investors their money back since 1993. Secondly, the distribution, under orders from the Supreme Court happened because SBI Funds Management was asked to oversee distribution. Third, all this happened because Midas Touch's Virendra Jain went to court and fought hard at the High Court and Supreme Court. So, please don't keep harping about CFMA. Lastly, read the Morning Context story to read more about Franklin's dubious behaviour brought out in a FORENSIC Audit. But you will need to pay to read the article there. Do not use our public platform to spread misinformation and mislead investors or we will need to take action. If you don't like what we write, the best solution is NOT to read. The trend of comments here shows that there are hardly any real investors commenting, even if some are pretending to be investors. Since we have helped thousands of people get their money back from dubious promoters - through Moneylife Foundation, we should know.

    karthiktemp

    2 weeks ago

    If 2 shut schemes have received miniscule amount, does it not mean the remaining 4 schemes have fared better in distribution of monies? And ML is clearly aware any distribution is not based on whims and fancies of FTMF but the Maturity profile of the underlying instruments of the scheme.
    So can there be not a word of acknowledgement (let alone appreciation) about the proper distribution of monies of matured instruments done by FTMF under the supervision by the top court ?
    I recall other such publishings of MoneyLife cribbing about the petty things like voting button colors etc.
    I shudder to imagine what would have happened had the investors voted against the shutting down as per the inclination of ML/CFMA and letting the schemes open for redemption ! Better sense has prevailed among investors (who are also ML followers) in not being carried away by such misleading voices by ML/CFMA.

    Sad that MoneyLife has become mouthpiece of CFMA and has no interests to cover the positive aspects which is the investors have started receiving money as per communications by FTMF.
    What happens eventually when distribution of all 6 schemes are completed eventually (which is highly likely) ? Will ML run a column eating back their opinions and words and seek apology for causing unwanted mental agony / stress to investors based on such articles they have put ? No. By then there will be new scapegoat on the block to run new sensitive stories and keep investors on the edge and catch their attention.

    Ironically, ML will now say they are just messenger... so that investors have only themselves to blame and move on to look ahead for more new sensational stories!

    Also perennial SEBI bashing is another feather on the cap for ML !

    REPLY

    Arunesh

    In Reply to karthiktemp 2 weeks ago

    Yes, FT is the most charitable and benevolent organisation in the world. Unitholders should be ever grateful 😂😂😂

    ttjohn

    2 weeks ago

    Is CFMA is arguing in court that Fund A money should be distributed to Fund B? So that the loss can be averaged? Is it something Fund house or Liquidator also can do it legally? FT had published this data before the voting and distribution of money. In this case, I feel there might hidden motives so that Real issues will not come out?

    pandeysdk

    2 weeks ago

    Sir, I dont know why a good website like moneylife is allowing its space to be filled with such rubbish. I am an investor in 2 schemes of FT. My money got locked and I was very worried about the potential losses last year based on articles by CFMA published by you. In one scheme i got about 60 odd percent. In another scheme i got about 30 percent. i thought everything will go wrong with my money and i wont get anything back. i lost money in dhfl deposit also. but that was a much smaller amount. i went by the high return and AAA rating given to them. i took my investment details to a few bankers and chartered accountants and even a fund manager to get their opinion. all of them said that my money would come back and assured me not to worry. i thought they were telling all this to console me and to make me feel better. my son in law is an investment professional in UK and he did research into the full portfolio and told me that i will get all my money back with returns also. i thought he was also telling lies to console me. i am very upset with FT. but i am even more upset with CFMA as they caused extreme stress to me at this age. delay in getting money is one thing and loss is another thing. for someone like moneylife who is known to do good research before publishing any article, this is a disgrace. you have all the resources at your disposal to do a research on these funds and give an expert view. hair cut is a loss that is permanent and real. i had to use google to understand some of the terms used by these CFMA guys. i will never invest with FT again but i will not take moneylife article at face value anymore. my humble request to moneylife is to take ownership of the stuff that gets published on your website and not blame it on some press release given by agencies.

    REPLY

    cjninan

    In Reply to pandeysdk 2 weeks ago

    My sincere empathy Sir. I do feel for you. Anything we say or do cannot reduce the stress and strain caused to you. Moneylife is only trying to bring to light the things AMC do. These are important for us to understand the underbelly of AMC and how they operate. Money life is the only media which openly criticised Vedanta when they tried to do delisting. If it was not for CFMA, the entire episode would have gone undercovers and FT CEO would have said Well Done Boys for closing down 6 MF.
    CFMA and publication like money life has brought to light the foresensic report on these funds. Once again Sir, my sincere empathy.

    pandeysdk

    In Reply to cjninan 2 weeks ago

    CFMA did not do anything good for the investors. the hon. courts did good things for us. moneylife criticizing vedanta does not make them right in this case. this is like FT saying that my other funds are performing well so invest in them. moneylife published a rubbish article. it will be best to take down such stuff instead of backing it blindly. CFMA in this case acted against the investors interest.

    MDT

    In Reply to pandeysdk 2 weeks ago

    Kindly check maturity profile and payout information shared by Franklin Templeton MF as on 15 March 2021 for 6 schemes being wound up https://www.franklintempletonindia.com/downloadsServlet?docid=klnkwbx2

    MDT

    In Reply to pandeysdk 2 weeks ago

    Thanks for your very long comment. Moneylife is just a messenger here. We only published news as it is. What CFMA has said is the same information, which is available on Franklin Templeton MF's own website. Everyone cannot be wrong at the same time, right? We sincerely urge you to do a thorough check before investing your hard earned money and not afterwards.

    pandeysdk

    In Reply to MDT 2 weeks ago

    sir, i sincerely urge you to go through the details. my issue is with the usage of words like "hair cut" which means a permanent loss. i also know about the maturity profile. it is only an indication about what payments would come if there is no action is taken on the portfolio. you say that "everyone cannot be wrong at the same time" is no different from herd mentality attitude. i know that it would take time but my money will come back. it hit my bank accounts last month and i am expecting more money to come in the next 2-3 months. please dont defend your poor research. please introspect and stop publishing poorly researched articles. giving your space lends a lot of credibility to such things. i spoke to the SBI staff and they also said that they will be starting payments in a month or two. they did not sound pessimistic about being able to do the job. i am sure the courts and sebi will take tough decision on FT. this is no less than fake news and you are a messenger carrying fake news. please understand, your credibility is at stake. dont become like CFMA. no one bothers them any more.

    bhaskar.jain

    2 weeks ago

    "Notably, a debt mutual fund is similar to a bank fixed deposit wherein the principal amount always remains secured." -- Please don't spread such false notions.

    REPLY

    cjninan

    In Reply to bhaskar.jain 2 weeks ago

    fully agree - I re read the article and confused - I am sure money life is not so stupid to write MF is like Bank FD.

    vangalakrish

    2 weeks ago

    CFMA came out with all kinds falsified facts a day before the SC order. At that time, many media organizations pulled back the published article within few minutes. When someone has such dubious record, not really sure how come Moneylife published this article from CFMA.

    REPLY

    MDT

    In Reply to vangalakrish 2 weeks ago

    Moneylife is just messenger here. However, we did check what FTMF had shared. This info is same what CFMA has stated. Do check maturity profile shared by Franklin Templeton MF as on 15 March 2021 for 6 schemes being wound up https://www.franklintempletonindia.com/downloadsServlet?docid=klnkwbx2

    rajitsehgal9

    2 weeks ago

    In first instance CFMA should be booked for nefarious activities. The whole article is absurd. Thankfully the courts are not paying any heed to such retarded arguments.

    REPLY

    MDT

    In Reply to rajitsehgal9 2 weeks ago

    You may want to check maturity profile and payouts shared by Franklin Templeton MF as on 15 March 2021 for 6 schemes being wound up https://www.franklintempletonindia.com/downloadsServlet?docid=klnkwbx2

    akshay.bhgwt

    2 weeks ago

    Article shows the poor knowledge of the author about "write off", "hair cuts". Claim of CFMA is totally misleading and creating panic in investors. I am an investor in these funds and, though I am not comfortable with what FT did, I can say, CFMA is twisting the facts to create panic among investors

    REPLY

    Arunesh

    In Reply to akshay.bhgwt 2 weeks ago

    FT Paid comment

    Meenal Mamdani

    In Reply to akshay.bhgwt 2 weeks ago

    CFMA says that the unit holders of the two said funds either got nothing or only 8% of their investment back after the 2 funds closed down.
    Yet you say the CFMA is wrong in labeling these losses. The labels are unimportant. What is important is the amount of loss.
    Is this not a huge loss?
    I would appreciate why you say that despite these losses CFMA is causing panic by enumerating the losses.

    peekaye07

    In Reply to Meenal Mamdani 2 weeks ago

    CFMA is using the same facts as FT but it is fear mongering by selectively playing up things. They are acting as Torts, wanting to file class action legal suits on investors behalf for a fee. I strongly believe, FT under SC and SBI will give us a better deal than CFMA. To date CFMA is only responsible for the delays caused.

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