The Madras High Court on Friday issued notices to Franklin Templeton Mutual Fund and Securities Exchange Board of India (SEBI) after a petition was filed by a Chennai based investors group that called for safeguarding ₹28,000 crores of investors’ money lying in six schemes closed by the fund house recently.
The investors group Chennai Financial Markets Accountability (CFMA) said in a statement that it is launching a separate online petition to bring together other affected investors. The petition will be forwarded to the Prime Minister’s Office, the fund house’s US parent and also to the US securities market regulator Securities and Exchange Commission.
CFMA said that the High Court has issued notices to SEBI, Franklin Templeton Asset Management India Pvt Ltd (FTAMC), the trustees of the mutual fund, its President Sanjay Sapre, CIO for fixed income Santosh Kamath and other key management personnel.
The High Court has asked SEBI to file their reply along with status report of the action taken.
CFMA’s counsel Nithyaesh Nataraj said that the mutual fund schemes are debt schemes which are considered to be more secure than equity schemes. He said that “in the present difficult times, the unitholders who otherwise have right to liquidate their holdings now have their hands tied and have to wait for over 5 years, and by then FTAMC would have left the Indian shores.”
“The unitholders are left in lurch and will not even be able to foot emergency medical bills, leave alone fulfilling their dreams for themselves and their family”, he added.
He said that so far there has been no commitment from FTAMC and SEBI assuring the investors of the repayment of atleast the principal amount.
Mr. Nithyaesh went on to say that closing of six schemes by the FTAMC was only the tip of the iceberg emphasizing that Franklin Templeton, considered to be one of the best mutual funds, has now gone default. “If this can happen to the best mutual fund, imagine what could happen to the rest.”, he added.
CFMA has sought the disclosure of fund house’s personal assets along with their relatives, injunction in disposal of the assets, restraining them to resign until the entire amount is recovered, restraining their travel abroad, amongst other things. It also said that it has sought for the constitution of a Special Investigation Team (SIT) to oversee SEBI.
The body has also alleged that the mutual funds industry have been running a campaign called “Mutual Funds Sahi Hai” with industry body AMFI to “hypnotize, mesmerize and orient” people, largely the middle class to get them believe that amount invested in mutual funds is safe. It further stated that the disclaimer put at the end “mutual funds are subject to market risks” does not absolve the mutual funds, its fund managers, trustees and fund managers and KMP of the fraud committed.